Issues & Insights

Time To Pin A Medal On Larry Summers For His Bidenflation Prediction

We’re not big fans of economist Larry Summers, but in this case, he should be in line for a Nobel Prize for predicting exactly what is happening with inflation today … and who is to blame for it.

On Wednesday, the Bureau of Labor Statistics reported that inflation climbed at an annual rate of 6.2%, the biggest such jump in three decades.

And that’s despite repeated predictions from other “experts” that the spike in prices earlier this year was “transitory.” Even now, they are flummoxed. As the Washington Post put it Wednesday, inflation is “lasting longer than policymakers at the Fed and White House anticipated.”

But no one, we repeat, no one, should be surprised by the latest turn of events.

Go back and listen to what Summers was saying at the start of the year, and it’s eerily prescient.

Summers publicly and repeatedly warned that President Joe Biden’s $1.9 trillion “rescue” plan —which was Biden’s first big “achievement” that passed without a single Republican vote — would spark an inflationary spiral.

In an op-ed published in the Post back in February, Summers warned of the risk that “macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”

In March, after Biden had signed his $1.9 trillion monstrosity into law, Summers called it “the least responsible macroeconomic policy we’ve had in the last 40 years.”

In May, he said that “Whatever was the case a few months ago, it should now be clear that overheating — not excess slack — is the dominant economic risk facing the U.S. over the next year or two.”

It’s important to point out that Summers’ predictions came before the (unexpected) return of COVID and before the supply chain bottlenecks and shortages gripped the nation — both of which are now getting blamed for the inflation surge.

It’s also important to point out that, despite what Biden kept saying, the economy didn’t need rescuing. The nation’s GDP had almost completely recovered from the COVID lockdowns by March, and unemployment was tumbling. What’s more, vast amounts of money for the previous two COVID stimulus bills under President Donald Trump still hadn’t been spent.

Nevertheless, the response from the White House to Summers’ alarm was swift. Biden’s top economic adviser, Jared Bernstein, called Summers “flat-out wrong.” Treasury Secretary Janet Yellen said the same.

Biden himself repeatedly dismissed inflation fears, telling the public that the spike in prices would be short-lived and was simply a sign of the economic rebound. “As our economy comes roaring back, we’ve seen some price increases,” Biden said in July.

Others on the left piled on Summers.

Seth Ackerman, executive editor of the leftist publication Jacobin, wrote in September how “Larry Summers put his credibility on the line with wild predictions of runaway inflation in the wake of Joe Biden’s stimulus package last January. It’s looking like his predictions were wrong.”

It’s true that Summers wasn’t the only one ringing the inflation alarm. The New York Times surveyed economists at various top-ranked universities in June and found that many shared his concerns and that “about half of respondents who work in macroeconomics agreed that the latest stimulus package was ‘significantly’ too large.” There was no shortage of free-market economists issuing the same alerts.

But Summers had the most to lose by so publicly sticking his neck out. He’s a die-hard liberal who’d served in the Obama administration. He knew that raising a stink threatened the new president’s big-spending agenda. And, unintentionally or not, he called the lie on Biden’s claim that “leading economists” all agreed on the need for another massive COVID stimulus.

Now that Summers’ prediction is coming true, will any of his detractors apologize? Will any admit that Biden’s $1.9 trillion spending spree — which is now being followed by a $1.2 trillion infrastructure bill and, quite possibly, a multi-trillion dollar welfare expansion — was a colossal mistake? Will they acknowledge that Biden is principally to blame for the inflationary spiral the economy appears to have entered?

Don’t count on it. Biden is running around the country claiming that still more deficit-financed spending will somehow cut prices. Everyone else is busy looking for other scapegoats. Anything so as not to hold Biden, or themselves, accountable for the damage being done.

— Written by the I&I Editorial Board

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The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.

6 comments

  • Lies are the mother’s milk of Democrat politics, and the GOP goes along with it to collect their “free” baubles. GOP Senate leader Mitch McConnell was ecstatic to get a Kentucky bridge as his share of the latest inflationary $1.2 trillion tranche. Absolutely disgusting, two corrupt political parties conspiring in this on-going inflationary, trillion-dollar money-printing orgy.

    The well-paid (at taxpayer expense) Washington swamp vermin are oblivious and insulated from the economic devastation of inflation inflicted on their enemies, the conservative American people. But Biden and the neo-Bolshevik swamp rats are likely keenly aware, even as they lie and obfuscate. Every action of Biden and the neo-Bolsheviks is aimed at destabilizing and weakening the USA. Inflation is just one more weapon in their toolbox.

  • Supply chain bottlenecks and shortages are what is CAUSING the inflation all of which are predictable results of the $1.9 trillion “rescue” plan along with continued disincentives to work (e.g. increased SNAP benefits, subsidized health insurance, etc.)

  • In 1930 the US National Debt was 16 Billion. 50 years later, in 1970, it crested the 370 billion mark. 10 years later it was approaching 1 trillion, coming in at 908 billion. I went into business at the age of 25 in 1979 at the time Paul Vockler was raising interest rates to stave off runaway inflation that had broached 10%. In 1979, I made a loan from Nations Bank (now Bank of America) and the interest rate on that loan was prime plus one, which equaled 21%. This tightening of the money supply brought both, inflation and interest rates, back under control by the end of the decade. But deficit spending by the government did not stop, it only got worse. 1990 found us with a debt 3 times that of 1980 coming at 3.23 trillion. The year 2000 saw it almost double; 5.67 trillion. When I retired from my business in 2008, the debt was a coming up on 8 trillion. Here we are 13 years later and, with the Infrastructure Bill that has been passed; we are on our way to quadrupling that 8 trillion as the debt crosses the 30 trillion threshold.
    In 1970 in Charleston, SC there was still penny candy to be had, nickel candy bars, a pack of smokes were 25 cents and a gallon of gasoline, during the gas wars, could be purchased for 17 cents at full service gas stations. Inflation, in my opinion, is caused by the Federal Reserve printing a never ending supply of money that the Federal Government, through deficit spending, hands out for free, which in turn drives up the cost of everything. Of course there are other factors involved, but the core of the problem I believe, is what I have stated above.

    • Fed money-printing (e.g. QE, Stimulus) = Currency Devaluation.

      Which is why the nickel candy bar of one generation is the one-dollar candy bar of the next generation. Given time it will be the ten-dollar candy bar for a new generation that will see it as normal. Unless they obfuscate matters like in Argentina, where every so often 100 old dollars (pesos) in bank accounts is instantly converted to 1 new dollar. Keeps prices constant.

      Federal Reserve flags should wave in the wind with their mantra: “Inflate or Die”

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