Top Obama economist Larry Summers blows away the Biden Administration’s claim on inflation. Biden and crew claim that inflation is just temporary does not take science into account. Producer’s pricing has increased by nearly 10%. You have to be a fool to believe they will not pass on their increased costs to the consumer. Summers takes the time to answer questions on inflation and his opinion is much different from what Biden is putting out.
“I think the data flow is saying what I’ve thought for quite some time that, yes, there are transitory elements in inflation, and very likely they will recede, but we are basically moving towards higher entrenched inflation. It’s there in expectations, it’s there in wages, it’s there in labor shortages, it’s there in the pervasive pattern across many different prices.”
“And people try to excuse it by picking this figure and that figure from month to month, but we’ve got an overheated economy, and the Fed’s gonna have a very real challenge of cooling that economy off and doing it in a controlled way. That has not been done very successfully in the past. So it’s going to be a very challenging year for macroeconomic policy.”
Summers was asked if the WH claims that inflation is simply a result of “a supply-side problem. Summers replied:
“No, he’s wrong.”
“We have a massive, overheated labor market. We have the highest ratio of vacancies to unemployment in the country’s history, by a large margin. We have shortages of labor, in everything from psychotherapy, to McDonalds, in everything from investment analysts to gardeners, that suggests a surfeit of purchasing power and demand relative to the capacity of the economy to produce and unless we bring those things into balance, we’re going to have not just higher inflation, but possibly even accelerating inflation. And we need to recognize that we have an overheated economy that we are going to need to cool off.”
“Every time a Washington policymaker suggests that this is caused by corporate greed or some such, they are delaying the date at which we will achieve the credibility necessary to bring down inflation with stable employment.”
Biden has a lot of excuses and he says he knows all of the questions. Too bad he doesn’t know any of the answers. he had all of the answers during the campaign, but he must have forgotten all before inauguration day.