Former U.S. Treasury Secretary Lawrence Summers said in an interview with foreign media that President Joe Biden’s $4 trillion plan to reshape the government’s role in American life has chosen the right target, but has brought inflationary risks to the U.S., which is recovering quickly from the new pneumonia (Chinese Communist virus) outbreak.
He noted that the U.S. is currently experiencing a labor shortage, stating that “workers are quitting at a rate normally seen in boom times,” a situation that is usually a harbinger of inflation, which worries him.
Summers previously issued a similar warning in March, saying that the United States is suffering from the “most irresponsible” overall economic policy in 40 years, the Democratic and Republican parties together to concoct a “huge” risk.
He lashed out at Biden’s $1.9 trillion stimulus package, arguing that there is a 1 in 3 chance that inflation will accelerate in the next few years and that we could face a stagflation crisis. Another 1/3 possibility that the Federal Reserve will hit the brakes sharply, inflation did not come, and then the economy is close to recession. The last possibility, only in the case of not triggering inflation, the Federal Reserve and the Treasury Department to jointly promote the U.S. economic growth.
Summers said that the recovery after the new crown pneumonia epidemic will bring demand pressure, but the U.S. fiscal policy is actively easing, in addition to stubbornly not raising interest rates, but also continue to expand the balance sheet, describing the economic crisis is detonating. He reiterated that the current overall economic policy poses an unprecedentedly large risk.
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