Commentary
Few macroeconomists have been as influential over the past half century as Robert Lucas. He won the Nobel Prize in economics, and his famous Lucas critique reshaped macroeconomic thinking. In his Presidential Address to the American Economic Association, he declared that the “central problem of depression prevention has been solved.” Five years later, the 2008 financial crisis struck. For a long time, many economists believed that double-digit inflation belonged to history. The COVID era proved them wrong. Recessions and high inflation remain real dangers, not relics of the past. That is precisely why Kevin Warsh, Trump’s nominee for the next Federal Reserve chair, is exactly what the Fed needs. He understands how the system works and, more importantly, what is fundamentally wrong with it.
