Larry Summers claims the American Rescue plan was ill-advised but still supports Build Back Better. He is half right.
Larry Summers only half right.
We should tire of these neoliberal economists. Their rhetoric is always inconsistent bearing little resemblance to reality. Ironically, the utterances from economists like Stephanie Kelton and others who understand Modern Monetary Theory (MMT) generally get disparaged by these charlatans. The thing is, the slack in our economy as MMT economists speak about is the exact reason we had no inflation of consequence over the last 40 years or so. Today’s inflation is caused by yet another failure in the private sector, read supply chain issues, and outright profiteering. Companies are pseudo-monopolies with pricing power.
Now, Larry Summers is trying to blame inflation on the American Rescue Plan. He is looking at the wrong vector. The shortages from the supply chain are in distinct areas yet inflation seems to be broad-based. Again, it is just profiteering.
Larry Summers said in the interview in this clip that he teaches his class that inflation of the type we are currently having does not change one’s standard of living. But he said paraphrasing that since Americans do not “feel” that concept he is willing to sacrifice some with unemployment to mitigate inflation. That is the nature of our economic system. Reality check: false choice.
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