Claim: “There’s nobody suggesting there’s unchecked inflation is on the way. No serious economist,” President Joe Biden said on Monday.
Larry Summers is worried about inflation. He has been the Treasury Secretary under Bill Clinton, director of the National Economic Council under Barack Obama, chief economist of the World Bank, and president of Harvard University. He is one of the most prominent economists in the United States today.
Summers has been warning that the Biden administration’s policies risked inflation and overheating several months ago, a topic he returned to on Twitter last week.
Labor market tightness, behavior of housing markets & asset prices all rising in a more concerning way than I worried @ a few months ago. This raises my degree of concern @ overheating scenario. There are huge uncertainties but the focus of concern now should be on overheating. https://t.co/gIV3jHDBGv
— Lawrence H. Summers (@LHSummers) July 14, 2021
In an interview on CNN, Summers expanded on his worries. The Biden administration’s American Rescue Bill, he said, made the mistake of pumping up demand too much without taking steps to increase supply. That had resulted in inflation.
Summers also criticized the Fed’s position on inflation. Like Biden, Fed chair Jerome Powell has insisted that inflation will be transitory.
“I think the Fed has been wrong for the last six months in its optimism that inflation will be transient,” Summers said.
Summers is not alone. Several other prominent economists are worried that inflation will last longer than the Fed and the Biden administration anticipate.
Ironically, Summers reportedly met with White House officials to discuss his concerns last week.