.@JosephEStiglitz is a brilliant micro theorist. Unfortunately, his attempts at practical macroeconomics commit all the errors of wishful thinking that have brought the United States to this point.

A Balanced Response to Inflation rooseveltinstitute.org/2022/02/09/a-b…
In June, he called inflation a red herring and said that if it wasn’t, the Fed could act decisively to stop it. Now with 7 percent inflation he opposes substantial increases in interest rates.
He says inflation is volatile and has come down by half since October. Actually, monthly CPI inflation has been at annualized rates above 7 percent for all of the last 4 months.
He blames inflation on particular bottlenecks but pays no attention to trimmed mean and median inflation measures or core measures favored by serious analysts, all of which show substantial inflation acceleration.
He claims inflation expectations are well anchored-- ignoring the market for 1 and 2 years-- inflation swaps which have been on fire, and data from the NY Fed and University of Michigan showing pronounced increases in inflation expectations.
Wage inflation is now running above 5 percent quite pervasively and accelerating even as labor markets tighten. How does this square with a return to 2 percent inflation?
What conceivable basis does Joe have for blaming high oil prices on greedy oil companies? Have they really gotten greedier and so raised prices in the last months?
.@paulkrugman, who has been much more inflation serene than I, recognizes the need for strong monetary policy. There is plenty of room for debate about just what this means. But inflation denialism of the Stiglitz variety is a prescription for stagflation followed by recession.
I trust that all of those nominated by Pres Biden to the Fed will know better than to take the Stiglitz perspective in formulating monetary policy.

• • •

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

Feb 6
I am sorry to see the @nytimes taking MMT seriously as an intellectual movement. It is the equivalent of publicizing fad diets, quack cancer cures or creationist theories.

nytimes.com/2022/02/06/bus…
Yes article does point out data it regards as inconsistent w MMT & quotes @jasonfurman as being critical but this is like reporting symmetrically on the ongoing argument btw evolutionary biology & creationism & noting a development on evolutionary side. Fundamentally misleading
I greatly admire @jeannasmialek's reporting but I was very disappointed this time out. She was also victimized by an egregiously misleading headline, if the goal of her story was to point out MMT’s weakness.
Read 8 tweets
Jan 27
I approve of the Fed’s turn towards recognition of inflation as the primary threat to the US economy. I can’t understand why they are still doing QE on any scale. Perhaps they will learn the lesson that being specific @ future intentions is dangerous b/ of what it locks you into.
I don’t understand the communications strategy behind causing major volatility during the press conference rather than delivering all the messages in the FOMC statement.
The Flexible Average Inflation Target (FAIT) framework taken seriously would require a period of sub 2 percent inflation to offset what we are now going thru.
Read 5 tweets
Jan 19
1/ @paulkrugman works to manufacture disagreement between us over antitrust policy and its relation to inflation.

Paul agrees that increased monopoly power of a kind addressable by antitrust is at most a minor cause of the recent surge in inflation.
2/ I was clear in my tweets that if inflation was simply being used as an impetus to support the Biden competition policy agenda, much of which I support, I had no objection.
3/ Paul invokes Kennedy’s attack on steel executives. That rhetoric was very strong. So were the legal tactics used by his brother’s Justice Dept. Most historians regard Kennedy’s victory as pyrrhic.
Read 7 tweets
Dec 26, 2021
The emerging claim that antitrust can combat inflation reflects “science denial”. There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.
I hope the Admin is simply using inflation as a way of adding urgency to the promotion of competition. That is a possible reading of this important @nytimes @jimtankersley @arappeport article. I strongly support much of the Admin’s competition agenda.

nytimes.com/2021/12/25/bus…
However, as described, hipster Brandeisian antitrust, with which the Admin and its appointees flirt, is more likely to raise than lower prices.
Read 14 tweets
Dec 24, 2021
Judged purely in terms of economic impacts, the Administration’s decision to extend student loan moratorium is highly problematic.
At a time when unemployment is unusually low and household balance sheets are very strong for all income quintiles, there is no special case for across the board relief now, unlike when it was put in place two years ago.
The Admin understood this when it made clear the last round of temporary debt relief would be the final one & not be extended. How much things have changed since the onset of Covid when it was completely explicit that student loan relief would sunset after the previous extension
Read 12 tweets
Dec 22, 2021
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

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

Don't want to be a Premium member but still want to support us?

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!

:(