Nobel Prize-winning economist Paul Krugman warns that the United States is experiencing a “sudden stop crisis,” a phenomenon typical of emerging markets, in which foreign investors lose confidence and abruptly stop capital inflows. Krugman explains that Trump ”inherited a robust economy that emerged from post-Covid inflation without significant increases in unemployment, but he quickly dissipated that advantage by imposing destructive tariffs, generating political chaos and fueling a climate of instability.”
On his web page, Krugman writes that, “What we are seeing now is something familiar to those of us who have studied economic crises in other countries, usually emerging markets. This is what happens when a country that has relied on large inflows of foreign capital loses the confidence of international investors. The inflow of money dries up – and the economic consequences are generally severe.”
The expert’s conclusion is cutting: no reasonable investor would trust America today, and the fear of political repression, such as the risk of being arrested by ICE for criticizing Trump, discourages even those who would simply visit the country to assess economic opportunities.
According to Krugman, “None of this was necessary. The U.S. economy was doing well before Trump took office. ‘Trumponomics’ is not an answer to real problems. He is a president who has waged a war on competence by indulging in his personal obsessions.” And the respected economist stresses that America and the world will suffer the consequences.
