Larry Summers criticizes stimulus plan and is seeing worst Marcoeconomic policies in 40 years

[Torie]

Almost every post here is a partisan or ideological observation about an economist who made a macroeconomic prediction. That seems misplaced to me. And Summers' prediction was hardly way out there: a third chance of inflation, a third chance of recession, and a third chance of a cake and eat it too outcome, of rapid growth with not much inflation. He simply believes the current policy entails taking unnecessary risks. On these matters I personally have no idea who is right. But I don't think Summers is making an ideologically based assessment, or a disingenuous one.

The problem here is that Summers is not Mankiw or Acemoglu - he is the Paul Krugman of neoliberalism, in that he is very often wrong because his ideological rationalism often gets in the way of objective empiricism. His pretensions are unconvincing because he does not say that the package is “unduly targeted” (a sensible claim easily made and easily proven) but because he insists upon projection. Economists, especially more mainstream ones, are VERY bad at projections.

You may be right, but in my view it is better to focus on the merits of his risk assessment (which I am not qualified to do), rather than associate biased motives to him based on his ideology or whatever.

[🦀🎂🦀🎂]

And Summers' prediction was hardly way out there: a third chance of inflation, a third chance of recession, and a third chance of a cake and eat it too outcome, of rapid growth with not much inflation.

Economists are basically those oracles in ancient times who said stuff like "if you go to war, then one side will lose". All we can see is a bitter court magician exiled by the new Emperor, bitterly stewing and saying that there will be a famine next year, but there might not be.

[MasterJedi]

And Summers' prediction was hardly way out there: a third chance of inflation, a third chance of recession, and a third chance of a cake and eat it too outcome, of rapid growth with not much inflation.

Economists are basically those oracles in ancient times who said stuff like "if you go to war, then one side will lose". All we can see is a bitter court magician exiled by the new Emperor, bitterly stewing and saying that there will be a famine next year, but there might not be.

When will the goat entrails be spilled on the capital steps to read the signs?

[Badger]

My criticism of the multiple stimulus plans is they're just handouts. There's no sense from either party of actually fixing structural problems (because that requires hard work and intelligence). Any idiot can spend money, that does not take talent. I'll meet you at a Las Vegas casino and we can find a bunch of drug addicts and drunks that can spend money. What concerns me is if Republicans under Trumpian philosophy have abandoned small government ideology (which to me it seems they have) we're now going to have both parties competing for who can give out the biggest handouts (that was Trump's strategy in 2020 post-Covid to win reelection), which is a great way to economically ruin this country once the Chinese and others stop buying treasuries, because remember selling treasuries is the only way the federal government are even allowed to run deficits.

Wow. Just wow. I read the first sentence and rolled my eyes. By the end of that paragraph my job was literally open. Kudos if you were trolling. Otherwise....

[Amenhotep Bakari-Sellers]

They are gonna have to pass another stimulus because in the Fall, Unemployment is gonna have to be renewed again, and the voters will vote out D's if they don't renew Unemployment again

[OSR stands with Israel]

Guys that’s been wrong about everything is wrong some more

Looks like Summers was correct

[John Dule]

No no, you see, the best thing to do during rampant inflation is to spend trillions of dollars really suddenly.

[It’s so Joever]

The current inflation is largely being caused by supply chain disruptions which occurred as a result of Covid and how it changed factory processes along with a smaller workforce than before because a lot of older people opted to retire early. The former is a temporary problem that is slowly going to improve, the latter was basically destined to happen anyways, Covid just caused the demographic time bomb to set off all at once. Unless OSR wants to force a bunch of Florida boomers to work again (based) against their own will, I don't know what he wants. Maybe if y'all weren't so hawkish on immigration, we could consider importing workers to help fill these gaps.

[Ancestral Republican]

No no, you see, the best thing to do during rampant inflation is to spend trillions of dollars really suddenly.

It's thought the best thing to do for inflation was to blow a massive hole in the budget by giving tax cuts to huge companies for no reason.

[OSR stands with Israel]

No no, you see, the best thing to do during rampant inflation is to spend trillions of dollars really suddenly.

It's thought the best thing to do for inflation was to blow a massive hole in the budget by giving tax cuts to huge companies for no reason.

Doing so increased aggregate supply which reduced inflation which is what happened the last time we were in this mess if that’s what you are referencing.

If you are referencing the 2017 tax cut then lol at blaming that for the current crises

[Del Tachi]

A period of higher-than-usual inflation wouldn't be all bad, America is mostly a nation of job-hopping debtors after all

[It’s so Joever]

No no, you see, the best thing to do during rampant inflation is to spend trillions of dollars really suddenly.

It's thought the best thing to do for inflation was to blow a massive hole in the budget by giving tax cuts to huge companies for no reason.

Doing so increased aggregate supply which reduced inflation which is what happened the last time we were in this mess if that’s what you are referencing.

If you are referencing the 2017 tax cut then lol at blaming that for the current crises

You are making the bold assumption that aggregate supply is down because of a lack of incentive to increase the supply, when even plenty of companies have said this isn’t the case. The reality is that we are experiencing a labor shortage caused by demographic shifts and a temporary shock because for nearly a year, companies had completely shifted the way they manufactured things, what they manufactured, and how much they did. Such a sudden change combined with the public actually not being too scared to go out and consume as normal anymore obviously wasn’t going to be easy to adjust to. These changes in the global economy have led to numerous bottlenecks which just add on to eachother. This Forbes article explains it:

https://www.forbes.com/sites/garthfriesen/2021/09/03/no-end-in-sight-for-the-covid-led-global-supply-chain-disruption/?sh=68b47d393491

A tax cut may not be the right tool to use here, although you seem to think throwing tax cuts at problems makes them disappear no matter what.

If anything, a tax cut would increase aggregate demand leading to more inflation.

[OSR stands with Israel]

No no, you see, the best thing to do during rampant inflation is to spend trillions of dollars really suddenly.

It's thought the best thing to do for inflation was to blow a massive hole in the budget by giving tax cuts to huge companies for no reason.

Doing so increased aggregate supply which reduced inflation which is what happened the last time we were in this mess if that’s what you are referencing.

If you are referencing the 2017 tax cut then lol at blaming that for the current crises

You are making the bold assumption that aggregate supply is down because of a lack of incentive to increase the supply, when even plenty of companies have said this isn’t the case. The reality is that we are experiencing a labor shortage caused by demographic shifts and a temporary shock because for nearly a year, companies had completely shifted the way they manufactured things, what they manufactured, and how much they did. Such a sudden change combined with the public actually not being too scared to go out and consume as normal anymore obviously wasn’t going to be easy to adjust to. These changes in the global economy have led to numerous bottlenecks which just add on to eachother. This Forbes article explains it:

https://www.forbes.com/sites/garthfriesen/2021/09/03/no-end-in-sight-for-the-covid-led-global-supply-chain-disruption/?sh=68b47d393491

A tax cut may not be the right tool to use here, although you seem to think throwing tax cuts at problems makes them disappear no matter what.

If anything, a tax cut would increase aggregate demand leading to more inflation.

I didn’t say we should do another tax cut , it’s just that I don’t think we should increase taxes either . Also my point is Summers was correct that the stimulus would cause inflation because the fact is our economic situation wasn’t comparable to any recession at all .


The economy was gonna roar back as soon as the economy reopened up and throwing an extra 2 trillion dollars into the economy would inflate things

[OSR stands with Israel]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

[President Punxsutawney Phil]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Not that I think Summers is, well, completely right about the stimulus even in hindsight, people were way too dim in their assessment of him.

[OSR stands with Israel]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Not that I think Summers is, well, completely right about the stimulus even in hindsight, people were way too dim in their assessment of him.

Even without hindsight, it was clear that the stimulus bill would be inflationary. The economy was already bouncing back fast at that point and unemployment rate had already plummeted so throwing 2 trillion dollars into the economy would be extremely inflationary.

It’s just that every democrat by that point thought every economic situation was another 2008-09 and reacted the way they wished they did to 08-09.

[Associate Justice PiT]

     Wow, Summers was really vindicated here. Atlas once again proving that it is basically incapable of serious analysis and just assumes a priori that what the Democrats are doing is the correct course of action.

[Buffalo Mayor Young Kim]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Do you even know what hyper-inflation is?

It’s not 7%

But yes, the largest GDP growth in decades and virtually full employment sure is the result of the worst macro-economic policies in decades.

[President Punxsutawney Phil]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Not that I think Summers is, well, completely right about the stimulus even in hindsight, people were way too dim in their assessment of him.

Even without hindsight, it was clear that the stimulus bill would be inflationary. The economy was already bouncing back fast at that point and unemployment rate had already plummeted so throwing 2 trillion dollars into the economy would be extremely inflationary.

It’s just that every democrat by that point thought every economic situation was another 2008-09 and reacted the way they wished they did to 08-09.

Indeed, it was clear it would be inflationary.
As PiT put it, Atlas simply proved itself once again incapable of serious analysis.
You can't necessarily assume that a policy is inherently the best course of action merely because a political party decided on that course of action. One ought to be open-minded to other possibilities, no matter how popular or unpopular they may be at the time.

[GP270watch]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Do you even know what hyper-inflation is?

It’s not 7%

But yes, the largest GDP growth in decades and virtually full employment sure is the result of the worst macro-economic policies in decades.

 And at this point it's clear the pandemic shutdowns around the globe including the prolonged one in China(where nearly everything is made) on top of Russia's illegal invasion of Ukraine has more to do with inflation than monetary policy. This is without even getting into the decades of bad domestic policy that Mr. Summers and his ilk are responsible for. An affordable housing shortage is not the result of the Fed printing emergency stimulus but the result of The United States government failing to invest in new affordable housing programs for many decades.

[OSR stands with Israel]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Do you even know what hyper-inflation is?

It’s not 7%

But yes, the largest GDP growth in decades and virtually full employment sure is the result of the worst macro-economic policies in decades.

High inflation affects more people than semi high unemployment does and the unemployment rate wasn’t even high in March of 2021. Unemployment had already dropped from 14.8% to 6% by March of 2021 yet the economic situation was treated as if it was another 2008-09.

https://www.ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx

[Buffalo Mayor Young Kim]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Not that I think Summers is, well, completely right about the stimulus even in hindsight, people were way too dim in their assessment of him.

Even without hindsight, it was clear that the stimulus bill would be inflationary. The economy was already bouncing back fast at that point and unemployment rate had already plummeted so throwing 2 trillion dollars into the economy would be extremely inflationary.

It’s just that every democrat by that point thought every economic situation was another 2008-09 and reacted the way they wished they did to 08-09.

Indeed, it was clear it would be inflationary.
As PiT put it, Atlas simply proved itself once again incapable of serious analysis.
You can't necessarily assume that a policy is inherently the best course of action merely because a political party decided on that course of action. One ought to be open-minded to other possibilities, no matter how unpopular they may be at the time.

You realize that their are factors other than inflation right?
Like employment and GDP and wages?

And that current inflation is driven far more by transit and production issues than spending.

And frankly I’ve never seen you base your options on anything other than knee jerk contrarianism. So you know, glass houses.

[President Punxsutawney Phil]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Not that I think Summers is, well, completely right about the stimulus even in hindsight, people were way too dim in their assessment of him.

Even without hindsight, it was clear that the stimulus bill would be inflationary. The economy was already bouncing back fast at that point and unemployment rate had already plummeted so throwing 2 trillion dollars into the economy would be extremely inflationary.

It’s just that every democrat by that point thought every economic situation was another 2008-09 and reacted the way they wished they did to 08-09.

Indeed, it was clear it would be inflationary.
As PiT put it, Atlas simply proved itself once again incapable of serious analysis.
You can't necessarily assume that a policy is inherently the best course of action merely because a political party decided on that course of action. One ought to be open-minded to other possibilities, no matter how unpopular they may be at the time.

You realize that their are factors other than inflation right?
Like employment and GDP and wages?

And that current inflation is driven far more by transit and production issues than spending.

And frankly I’ve never seen you base your options on anything other than knee jerk contrarianism. So you know, glass houses.

Mainstream economic theory could have told you that dumping trillions into the economy increases inflation.
Also, I doubt my utter hatred of Louis DeJoy could be explained by some kind of "knee jerk contrarianism". But you do you.

[Former President tack50]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Do you even know what hyper-inflation is?

It’s not 7%

But yes, the largest GDP growth in decades and virtually full employment sure is the result of the worst macro-economic policies in decades.

I will say I'll take the current US situation (huge GDP growth, incredibly good job market, very high inflation) over our current situation (mediocre to bad GDP growth, good job market, inflation that's just as high)

The only advantage I can see to the EU's situation is that core inflation is lower, but even that advantage seems to be quickly vanishing, with inflation that's just as high.

[jojoju1998]

Guys that’s been wrong about everything is wrong some more

Amazing how 68 people recommended this

Do you even know what hyper-inflation is?

It’s not 7%

But yes, the largest GDP growth in decades and virtually full employment sure is the result of the worst macro-economic policies in decades.

I will say I'll take the current US situation (huge GDP growth, incredibly good job market, very high inflation) over our current situation (mediocre to bad GDP growth, good job market, inflation that's just as high)

The only advantage I can see to the EU's situation is that core inflation is lower, but even that advantage seems to be quickly vanishing, with inflation that's just as high.

Didint Spain and France have issues before the pandemic with job growth and employment ?