Summers: Without Changes, We’ll ‘Entrench Inflation Way above 2%’ – Reconciliation Bill Will Increas

[mystery-ak]

Summers: Without Changes, We’ll ‘Entrench Inflation Way above 2%’ – Reconciliation Bill Will Increase 2022 and 2023 Inflation

Ian Hanchett 11 Dec 2021

On Friday’s broadcast of Bloomberg TV’s “Wall Street Week,” economist Larry Summers stated that “we’re going to entrench inflation way above 2%, perhaps in the 4% or even higher range, unless something happens to break the current mood,” and the Build Back Better reconciliation bill will increase inflation over the next two years, but it could be offset by the Federal Reserve’s monetary policy.

Summers said, “We’re having it confirmed that it’s not transitory. And I think everybody recognizes now, with the statements from Chairman Powell, with the statements from Secretary Yellen, that this isn’t going to just go away of its own accord, that the Fed’s going to have to take substantial action to control inflation, unless there’s some kind of other adverse development, a crack in markets or something of that kind. But we’ve put in motion, for the first time in 40 years, excessive inflation caused by overheating of the economy, and that’s going to have to be worked out of the system, and that’s probably not going to be such an easy thing.”

He added that while there are elements in inflation that are transitory, that doesn’t mean price stability will be achieved on its own. Summers further stated, “I think we’re going to entrench inflation way above 2%, perhaps in the 4% or even higher range, unless something happens to break the current mood, to break the current trend. And I don’t think it’s going to be three rate increases or two rate increases next year.”

Summers also argued that the Build Back Better reconciliation bill would increase the inflation rate in 2022 and 2023, but by an amount that the Federal Reserve could “easily” offset.

https://www.breitbart.com/clips/2021/12/11/summers-without-changes-well-entrench-inflation-way-above-2-reconciliation-bill-will-increase-2022-and-2023-inflation/

[Kamaji]

My bet is, at some point we'll wish for inflation as low as 6% or 8%.

[LMAO]

My bet is, at some point we'll wish for inflation as low as 6% or 8%.

And probably sooner than some expect

The Republicans are going to make inflation an issue but they don’t really have a plan to deal with it, either

[Hoodat]

Larry Summers is no expert when it comes to economics.  His 2% number today is no more accurate than was his 40% number in 1981.  The only thing that will drive down our current 6% rate is the consequences of unemployment.  Except with today's obscene government payouts, there are no consequences to being unemployed.

[catfish1957]

Most under 55 have never really experienced inflation in this country.  It's a double whammy on the financial backs of the victims.  (1) Your income and overall buying power is reduced, while (2) that same concept applies to your net worth.

Back in the those days in the '70's, you didn't need or have expiration or "use by" dates on your groceries.  You always new the cheaper item was the oldest.

Not that many of us left who remember how hated Carter was, and his cozying up to what in his eyes was "unavoidable malaise".  I expect the exact political ramifications this time, except I guess no one expects Biden to run again.

[Hoodat]

Not that many of us left who remember how hated Carter was, and his cozying up to what in his eyes was "unavoidable malaise".  I expect the exact political ramifications this time

At least back then, the press was willing to provide an accurate report on how bad things were, Ted Koppel chief among them.  But not so with today's propagandists.

[LMAO]

At least back then, the press was willing to provide an accurate report on how bad things were, Ted Koppel chief among them.  But not so with today's propagandists.

True

Even though the  press during the 1980 campaign preferred Carter over Reagan, I don’t recall any reporting of how great things were and how inflation was actually a good thing

[catfish1957]

At least back then, the press was willing to provide an accurate report on how bad things were, Ted Koppel chief among them.  But not so with today's propagandists.

Good point, but hopefully most will realize that MSM downplaying inflation will be analogous to them being pissed on, and while being told it's raining.

Also, if you look at the fed debt to GDP ratio in 1980, it was 37%.  Now it is 67%.  This situation is much more ominous and sinister.  I believe we are a few short years from seeing the slate wiped clean.  Either scenario will have epic political ramifications.  (1) Fedzilla continues to escalate, finally approaches exponential, and we see a 1923 Wiemar type hyperinflation event.  Or (2) The Fed, throws on the breaks and decides to take us off the cliff in a meltdown that will make the '30's look like a carnival ride.

Last year I was leaning 60/40 toward scenario (1)   I am now thinking more along lines of 65/35.  And like you said, as long as there is a complict MSM spinning this in the dims favor, it makes it more and more likely that will be the outcome.

[Kamaji]

At least back then, the press was willing to provide an accurate report on how bad things were, Ted Koppel chief among them.  But not so with today's propagandists.

[mountaineer]

Read: Biden: Today’s High Inflation Numbers Show We Have to Pass Build Back Better, from National Review.

Meanwhile:
Liz Young
@LizYoungStrat
Producer Price Index (PPI) came in at 9.6% y/y, higher than the estimate of 9.2% and Oct's 8.8%. New record high. Strong increases across all categories. We started 2021 with PPI below 2% y/y and now we're nearly at 10%.

8:50 AM · Dec 14, 2021·

[DefiantMassRINO]

The Build Back Bogus Plan is not the plunger that will unclog the chokepoints of our economy and supply chains.

[catfish1957]

Read: Biden: Today’s High Inflation Numbers Show We Have to Pass Build Back Better, from National Review.

Meanwhile:
Liz Young
@LizYoungStrat
Producer Price Index (PPI) came in at 9.6% y/y, higher than the estimate of 9.2% and Oct's 8.8%. New record high. Strong increases across all categories. We started 2021 with PPI below 2% y/y and now we're nearly at 10%.

8:50 AM · Dec 14, 2021·

And just as a side note.....  This disasterous number is significantly understated due to governmental fuzzy math.  My research shows  punditry thinking we are more in line with a 12-18% acutal inflation rate.

What is really scary and what people don't realize is what we dealt with in the '70's was a gradual increase in CPI.  This rocket shot might be more telling of an accelerated drop off a cliff.  Add a $3-5T  useless Fedzilla boondoggle?   This is a diaster in the making.

[Kamaji]

It's going to get really, really ugly.

[Hoodat]

I believe we are a few short years from seeing the slate wiped clean.  Either scenario will have epic political ramifications.  (1) Fedzilla continues to escalate, finally approaches exponential, and we see a 1923 Wiemar type hyperinflation event.  Or (2) The Fed, throws on the breaks and decides to take us off the cliff in a meltdown that will make the '30's look like a carnival ride.

The Fed is an independent entity.  There is no legal obligation that compels them to increase the money supply for the sole purpose of funding government excess.  Option 2 is clearly the better option here.  'Throwing on the brakes' will simply be a matter of ending the printing of the money.  When that happens, all government excess will have to be financed by dollars already existing on the global market.  And that (not the Fed) is what will cause interest rates to rise.  Imagine the T-bill interest rate it would take to attract $2.5 trillion in a single year for the government to spend.

And there lies the rub.  Because the Fed board members all have buddies that work for Goldmann Sachs, Black Rock, etc., that will be hurt when $2.5 trillion in available investment gets handed over to the government instead.  That's $2.5 trillion that won't be going into the US stock market. So Option 1 will continue to be their choice.