The former Treasury Secretary under Bill Clinton is blasting the country’s current economic possible calling it the “least responsible” in four decades and insisting that “enormous risks” are being created.
Larry Summers, who also served as head of the National Economic Council in President Obama’s Administration told Bloomberg TV that, “These are the least responsible fiscal macroeconomic policy we’ve had for the last 40 years.”
The United States, he warned, will face “a pretty dramatic fiscal-monetary collision.”
“What is kindling, is now igniting,” explaining that the Covid recovery will create demand at the same time as the government is giving out money and the Federal Reserve is “stuck to its guns” on loose monetary policy.
Only “1-in-3 Chance” of Policy Working
Summers went on to say that there was a “one-in-three chance that inflation will accelerate in the coming years” and the U.S. could face stagflation.
He also said he saw the same chance of NO inflation because the Fed would hit the brakes hard and push the country toward recession.
The final possibility, he said, is that the Fed and Treasury WILL get rapid growth without inflation which is, of course, what they want.
Nonetheless, the former economist from the World Bank cautions, “There are more risks at this moment that macroeconomic policy will cause grave risks than I can remember.”
Summers has been sounding the alarm for months and has been heavily criticized by the left for pointing out his concerns.