Larry Summers is just getting more 'worried' about inflation
Larry Summersrepeated his inflation fears, saying risks resemble those seen in the 1970s.
- The idea that
inflationcan't suddenly spike to worrying highs "is just plain wrong," he told Bloomberg TV.
- Lifting taxes on wealthy Americans and corporations could dull spending risks, Summers added.
Former Treasury Secretary Larry Summers reiterated his concerns about rampant inflation on Friday and questioned whether the Federal Reserve and the White House can control price growth as effectively as they claim.
The ink is barely dry on Democrats' $1.9 trillion stimulus plan, but President Joe
The famed economist cited the sudden and volatile nature of inflation in the late 1960s in his argument. Price growth stood at around 1% for a few months in 1966, yet it stood as high as 6% for some of 1969.The idea that inflation can't surge so unexpectedly "is just plain wrong," Summers said.
"It may be that a way will be found to bring it under control," the economist added. "But as I look at $3 trillion of stimulus, $2 trillion of savings overhang, a major acceleration coming from COVID in the rear-view mirror, rates expected by the Federal Reserve to be at zero for three years even in a booming economy, record growth this year, major expansion of the Fed balance sheet, and much new fiscal stimulus to come - I'm worried."To be sure, the Fed is standing its ground until inflation steadily trends above 2% before raising rates. Central bank chair
Covering stimulus costs with higher taxesThe impact of such massive relief spending could be offset by near-term tax hikes. The
There's "no rational economic case" for those cuts, and increasing tax revenue could help counter inflationary pressures moving forward, Summers said.
"I actually think the United States is now in a position where there are many ways we could raise tax revenue that would actually make the economy function better," he added.So far, the president is considering lifting the corporate tax rate to 28% from 21%, increasing the income tax rate for people making more than $400,000, lifting the capital gains tax rate for individuals making more than $1 million each year, and expanding the estate tax. There isn't a detailed package yet, according to the White House press secretary, but details could emerge as Biden rolls out his latest spending addenda.
"His priority and focus has always been on people paying their fair share and also focusing on corporations that may not be paying their fair share either," White House Press Secretary Jan Psaki said earlier this month.
- How to take screenshot on your Iphone
- How to change theme of your Instagram chat
- Larsen & Toubro sees a slowdown in new orders in the first three months of 2021 — management says contracts have been deferred
- Delhi plans to add 1,200 ICU beds in a day or two while daily Covid deaths drop to less than 300
- There is an online discount on the new Sovereign Gold Bond Scheme opening on Monday priced at ₹4,777 per gram