Top Obama Economist Slams Biden over Soaring Inflation
Former Treasury Secretary Larry Summers blasts Federal Reserve and Biden administration
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A top economist in the Obama administration has come out swinging against Democrat Joe Biden for allowing the United States to blindly walk headfirst into skyrocketing inflation.
Larry Summers, who was Secretary of the Treasury under Clinton and directed the National Economic Council under Obama, warned during an appearance on CNN recently that America must prepare for "inflation unseen in 30 years."
CNN host Erin Burnett asked Summers about Biden's handling of the economy:
"Given that you were worried about this before almost anybody else, and given that now you have got all these CEOs saying it’s going to go a year, maybe even past that, right, at that point, it wouldn’t be transitory, how long do you think inflation is going to go up?"
Summers replied with his expert opinion:
"I think the odds are that we’re going to have inflation of a kind we haven’t seen in 30 years, until either the Fed takes some significant move with respect to monetary policy, or until there’s some kind of accident that disrupts the economic growth we’re enjoying."
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"I think it’s possible but quite unlikely that inflation will recede back to its normal 2 percent level without some significant change in the path we’re now — we’re now on," he noted.
Following up in a Monday op-ed in The Washington Post, Summers continued by slamming the Federal Reserve and Biden administration’s response to the surge in prices.
“After years of advocating more expansionary fiscal and monetary policy, I altered my view this past winter, and I believe the Biden administration and the Federal Reserve need to further adjust their thinking on Inflation today,” Summers wrote.
Summers criticized Fed Chair Jerome Powell’s recent remarks when he called inflation transitory at a speech in Jackson Hole in August.
Opinion | On inflation, it’s past time for team ‘transitory’ to stand down
— Lawrence H. Summers (@LHSummers) November 15, 2021
Read my column on inflation and four policy prescriptions we need to do now.https://t.co/hXCKjh3i5t
While Powell expected prices to increase in select sectors, Summers pointed to inflation of commodity goods excluding food and energy, which increased 12% year over year.
Inflation surged to its highest record in 30 years, with the Consumer Price Index growing 6.2% on a year-over-year basis, the Bureau of Labor Statistics announced Wednesday.
Key inflation indicators, like used cars, were also expected to come down, according to Powell.
Instead, used car prices grew more than 30% year over year, while new cars, another important indicator, increased 17% year over year.
Market inflation expectations for the term of the next Federal Reserve chair was around 2.5% when Powell spoke in August, according to the Daily Caller.
Since then, expectations grew to 3.1%, according to Summers, while consumer confidence plummeted to a ten-year low due to inflation fears.
Additionally, Summers was on CNN’s “Cuomo Prime Time” Thursday, saying the White House is “behind the curve” fighting inflation.
“I think that the policymakers in Washington, unfortunately, have almost every month been behind the curve,” Summers told CNN Host Chris Cuomo.
"They said it was transitory; it doesn’t look so transitory,” Summers said.
"They said it was due to a few specific factors; doesn’t look to be a few specific factors."
"They said when September came and people went back to school, that the labor force would grow, and it didn’t happen.”
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To combat the growing inflation, the Fed announced on Nov. 3 that it would begin scaling back its monthly bond purchases by $15 billion in November from its current $120 billion monthly purchases, the Daily Caller reported.
"Inflation is elevated, largely reflecting factors that are expected to be transitory,” the Fed said in a statement.
"Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to a sizable price increase in some sectors.”
Summers tweeted Monday, arguing that the growing inflation could bring President Donald Trump back to the White House.
“Excessive inflation and a sense that it was not being controlled helped elect Richard Nixon and Ronald Reagan, and risks bringing Donald Trump back to power,” Summers said.
"While an overheating economy is a relatively good problem to have compared to a pandemic or a financial crisis, it will metastasize and threaten prosperity and public trust unless clearly acknowledged and addressed."
