Larry Summers recently expressed fears that Donald Trump may reclaim the presidency if skyrocketing inflation continues.
Summers, who served as Director of the National Economic Council in the Barack Obama administration and the Treasury Secretary in the Bill Clinton administration, has long been a fierce critic of the Biden administration and Federal Reserve’s handling of inflation.
In an opinion piece for the Washington Post, Summers argued that the government must reevaluate the serious threats that arise from higher prices.
Summers admitted that he had spent several years “advocating more expansionary fiscal and monetary policy,” though he now advocates for the Federal Reserve and Biden administration to “adjust their thinking on inflation today.”
Summers also warned that “excessive inflation” directly contributed to the past elections of Ronald Reagan and Richard Nixon, and he added that current levels of inflation carry the risk of “bringing Donald Trump back to power.”
Summers also cited Federal Chairman Jerome Powell’s from August to buttress his point, namely by rebuking five different arguments Powell made regarding the supposedly transitory nature of inflation.
However, Summers challenged Powell’s belief that inflation will naturally settle down, and he also dismissed the idea that inflation was merely impacting a few sectors within the economy. He also rejected Summers’s belief that increased wages may “threaten excessive inflation.”
Summers also pointed out that 4.4 million workers quit their jobs in September, which represents an approximate 100,000 increase over the previous month. Moreover, this number is the highest ever recorded since the nation first began keeping records roughly twenty years ago.
Throughout his commentary, Summers also remarked that the central bank’s own expectations regarding inflation have increased significantly since Powell’s annual speech, which was delivered in Jackson Hole, Wyoming.
At this point in time, “the most important supply-side policy the administration could undertake to combat inflation” would be to reduce tariffs, according to Summers. The former Treasury Secretary also added that the Fed could begin accelerating the tapering of its various asset purchases. Moreover, the central bank also stated that it would begin reducing its enormous monthly purchases of government bonds later on in the month.
Summers also recommended for Biden to start appointing Federal Reserve officials who recognize the major threats that inflation poses to the economy, given that these officials will take increasing prices more seriously.
Over the past several months, Summers has been sounding the alarm on inflation, well before other economists began to chime in about the danger of rising prices. Summers has also criticized current Treasury Secretary Janey Yellen given her views on inflation, and he has also not been shy in his criticism of the Federal Reserve, namely due to its general resistance to returning to relatively normal monetary policies.
Recently, inflation reached a 30-year high, as evidenced by its 6.2 percent increase in October.