Share this page!

Lawrence H. Summers Profile picture
Twitter logo
21 Dec, 5 tweets, 2 min read
⁦.@ojblanchard1⁩ is out here with a superb rigorous treatment of macro issues in the current low rate environment. …y-under-low-interest-rates.pubpub.org
Not surprisingly, I am largely in agreement with his analysis of the current world where secular stagnation has been and likely will again be a principal macro policy challenge.
If the view now priced into markets that the US economy cannot withstand a Fed funds rate as high as 2 percent even with high debt and deficits is right saving absorption/secular stagnation is a major macro challenge.
Many attribute low rates to an expectation of loose fed policy rather than fundamentals regarding saving investment and risk aversion. If so, markets should be pricing in higher long run rates of inflation.
My guess is that markets are wrong and will adjust but current negative real forward rates everywhere and way out in time point up the importance of @ojblanchard1’s analysis.

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Lawrence H. Summers

Lawrence H. Summers Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @LHSummers

Lawrence H. Summers Profile picture
22 Dec
This article is devastating. When ⁦@propublica⁩ sees overly heavy handed regulation they are super likely to be right.
propublica.org/article/this-s…
As with the aftermath of 9/11 or the financial crisis there should be a systematic review of the performance of key agencies after the pandemic arrived.
I suspect it will show that good and dedicated people applying traditional procedures to a totally new context made bad decisions that caused thousands of deaths.
Read 4 tweets
Lawrence H. Summers Profile picture
13 Dec
I cannot understand why so many in Admin & out cling to the idea that inflation is caused by bottlenecks & will soon recede to normal levels. Of course there is uncertainty but the idea that inflation will revert soon to levels anywhere near Fed’s target looks like a long shot.
Nonpartisan BLS CPI report refers to inflation as “broad increases in most sectors…similar to last month.” Inflation is not @ bottlenecks. Less than 10% of index saw inflation below 3% & aside from housing where figures are problematic, the share below 4% is less than quarter.
We have all seen house prices & rents soar. Home prices based on Case Shiller are up 15 to 20%, as are rental prices, as reported by the nation’s largest landlords. If we assume 17% residential inflation, both CPI and core CPI would have exceeded 10 percent last month.
Read 7 tweets
Lawrence H. Summers Profile picture
13 Dec
.@JHWeissmann has a thoughtful commentary on my inflation views. He is much more straight up than most of those who misjudged inflation risks earlier this year. I do disagree on a couple of points however.

slate.com/business/2021/… via @slate
First, I certainly did not foresee the specifics or full extent of bottlenecks, nor did I foresee that inflation would be running at close to a 10 percent rate during the 4th quarter of 2021.
There has been more bottleneck and transitory inflation than I predicted but my core prediction that the economy would overheat in a way that barring downturn would lead to sustained inflation way above 2 percent has proved out.
Read 5 tweets
Lawrence H. Summers Profile picture
3 Dec
We are nowhere near the end of the pandemic.

Incremental change within existing mechanisms has failed; we need a fundamental reset.

Read my article with @NOIweala @Tharman_S on
Rethinking Multilateralism for a Pandemic Era - IMF F&D

imf.org/external/pubs/…
Large unvaccinated groups and the unchecked spread of the virus around the world raise the prospect of further mutations, possibly evading today’s vaccines, that will create new waves everywhere.
Yet COVID-19 is also a forerunner of more, and possibly worse, pandemics to come. Scientists have repeatedly warned that without greatly strengthened proactive strategies, global health threats will emerge more often, spread more rapidly, and take more lives.
Read 12 tweets
Lawrence H. Summers Profile picture
18 Nov
CBO estimate for tax-compliance efforts is conservative to the point of implausibility.

Assuming Admin is successfully able to develop & implement sound plans for IRS, I'm confident the proposed investments can generate more revenue than CBO assumes.

washingtonpost.com/opinions/2021/…
Although the CBO has not disclosed its methodology in detail, I base my conviction on three considerations.

First, as best as can be discerned, the CBO assumes significant diminishing returns.
The Administration's proposal calls strongly for focusing new enforcement resources on the high end, where underpayments are greatest.
Read 7 tweets
Lawrence H. Summers Profile picture
18 Nov
The largest offset in the Build Back Better Act is not a tax increase. Instead, it is an $80 billion investment to restore a depleted IRS.

@USTreasury expects this transformative investment to generate $480 B — $400 B net — in addtl tax collections over course of next decade.
That is a large sum. But it's important to put it into context given the scope of the tax evasion problem faced by fed govt. Over next 10 yrs, IRS is on track to collect $7 T less than is owed. This enormous tax gap is around 3% of gross domestic product on an annualized basis
Today, the IRS has about the same number of auditors as it did during World War II, and the IRS can answer fewer than 30 percent of the phone calls it receives from taxpayers with questions.
Read 5 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

Like this author's thread?

Get emails when @LHSummers has new unrolls!

Check out other threads from @LHSummers!

Read all threads by @LHSummers

:(