Nobel Prize-winning economist: Biden's spending plan could help US break out of a 'bad equilibrium trap'

A Nobel Prize-winning economist is lauding President Joe Biden's proposed $4 trillion infrastructure spending plan as he believes the plan could revitalize the United States economy.

During an exclusive interview with Axios, Columbia University Professor Joseph Stiglitz offered his take on Biden's plan. Not only is he endorsing the president's plan but also looking forward to the positive effects and how it could help the country break out of its "bad equilibrium trap."

"We've been for the last two decades in an abnormal environment, we've been in a bad equilibrium trap," he said. "The inequality means people don't have demand, a lack of demand means we don't invest, so we've been in a very bad, vicious circle and I'm optimistic that this may break us out into a new period of strong growth, which is more egalitarian."

Stiglitz, winner of the 2001 Nobel Prize in Economics, believes money can be well spent under Biden's plan. He also named a number of ways economic stimulation could be empowering for the American people.

"We're going to heat up the economy," said Stiglitz. "We're going to be investing, spending money on education, child care, a whole variety of expenditures across the spectrum and not just giving money to the very rich but giving money to people who actually spend it. That will create more demand and that should give people more confidence to invest."

He added, "Now we're in a new world, and the defining characteristic is that fiscal policy is back."

Stiglitz also explained how the Federal Reserve could incorporate monetary policy so the economy can return to a sense of normalcy. "As we become more secure that we are in the path of recovery, backstops become less important, it's easier for them to be phased out, and over time we'll go back to more normal monetary policy, interest rates will go back to normal."

Since economic recovery will take some time as the United States is still in "very uncertain territory," Stiglitz warns that no one truly knows the true "nature of the scarring of the economy."