On the campaign trails in 2020, Joe Biden sought advice on the economy from neoliberal icon Lawrence Summers. Since he took office, the U.S. president is getting a lot more advice from Summers, albeit unsolicited and quite publicly.
Few of Biden’s most prominent supporters have been as openly critical of the administration and the Federal Reserve going full throttle on fiscal and monetary stimuli, respectively, as Summers.
The former Treasury secretary under Bill Clinton and one-time director of the National Economic Council under Barack Obama has been warning for several months that Biden’s $1.9 trillion stimulus plan to stem a pandemic-caused slowdown could hurt the United States with inflation levels not seen in years.
“I think policy is rather overdoing it,” said Summers to CoinDesk’s head of research, Noelle Acheson, and Bloomberg host Joe Weisenthal in a pre-recorded interview broadcast Wednesday during Consensus 2021.
“Fundamentally, the magnitude of the policy changes now is rather greater than the magnitude of the policy changes that set off inflation between 1966 and 1969, where we went from the below-2% range to certainly the above-5% range in just a few years,” said Summers, who was also once chief economist at the World Bank and president of Harvard University. “We’re taking very substantial risks on the inflation side, and we’re taking them well after there was a need to hedge against the deflation possibility