This is the head of the New York Federal Reserve Bank, the most powerful of the Fed branches. And he is wrong. He fails to comprehend, because he is a Keynesian hujuboojoo advocate, the simple lesson of Bastiat’s “Broken Window Fallacy.”
Storm destruction doesn’t expand the economy. Storms destroy capital. Building structures back just replaces what has been lost. The capital deployed to rebuild could have been directed elsewhere if there was no storm. So in other words we would have a completely intact Miami plus the capital with no storm. Versus a destroyed Miami that sucks in a bunch of capital.
This is the friggin president of the New York Fed. No wonder things are the way they are and why so many continue to struggle post 2008 Crash.
Hurricanes Harvey and Irma actually will lead to increased economic activity over the long run, New York Fed President William Dudley said in an interview.
Speaking just as Irma is about to start battering Florida as a Category 4 storm, Dudley said the initial impact in both human and economic costs will be harmful. But in the long run, economies tend to snap back from such major events.
“Those effects tend to be pretty transitory,” Dudley said in a live interview with CNBC. “The long-run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms.”