Monday, March 7, 2016

Larry Summers Warns of Deflation Threat

Absolutely amazing. He has no idea how the economy works.

He writes at FT (and filed for future reference)
Today’s risks of embedded low inflation tilting towards deflation and of secular stagnation in output growth are at least as serious as the inflation problem of the 1970s. 
To be sure, at some point, there will be a downturn in the business cycle, which is a creation of the Fed monetary manipulation. But there is no sign of that at the current time. The real threat is unexpected accelerating price inflation. First to the 3% range, followed by an advance to 5%.


1 comment:

  1. I don't see that much room for more credit expansion.