This week’s fall in stock prices was about as unsurprising as US President Donald Trump’s explanation for the setback — “The Fed has gone crazy,” he said. Expect more of the same over the coming weeks and months, as the US economy adjusts to the withdrawal of the US Federal Reserve’s post-crash monetary stimulus, and a reckless administration persists in testing investors’ nerve. Stocks have been generously valued of late, shrugging off bad policy too blithely. The outlook for public borrowing was worrisome even before Washington delivered a fiscal stimulus that an economy at full employment doesn’t need. And Trump’s approach to trade, including the growing prospect of an outright trade war with China, might have been designed to cause maximum economic anxiety. So far, the harm is to the outlook rather than to actual outcomes. In the short term, the stimulus has added to demand and supported the expansion. And Trump’s threats to raise tariffs and other trade barriers still greatly e...

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