Friday, December 25, 2020

The Larry Summers Christmas Eve Miracle

Larry Summers

I seldom agree with the Keynesian former Treasury Secretary Larry Summers but somehow a near miracle occurred on the eve of Christmas. He talked sense. 

I am not in support of his call for government support to state and local governments or his call for more testing and support of vaccines but he is spot on when he made the argument on Bloomberg TV that there is no aggregate demand problem.

There never is an aggregate demand problem but it is obvious the current period of lockdowns is not one. As Summers correctly notes, it is a problem of lockdowns that limits where people can spend money. And I hasten to add the lockdowns also halt production at the closed down businesses. 

I endorse entirely his warning that when you see  President Trump, Bernie Sanders and Josh Hwaliey forming a coalition that:

Something crazy in in the air [and...] it is time to run for cover.


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