In an interview published on Bloomberg’s “Wall Street Week” Friday, Harvard professor, economist, director of the National Economic Council under President Barack Obama, and Secretary of the Treasury under President Bill Clinton, Larry Summers, said he doesn’t think he’s discounting. At normal levels, inflation “without a significant increase in unemployment, perhaps 2 percentage points or more at some point in the future.”
Summers said: “I think the Fed and most market participants underestimate the seriousness of our situation. The Fed changed both its upside and downside forecast for the economy by an epic amount. But their current view that inflation will reach 2.5% or less and the unemployment rate will be just over 4 seems to me an optimistic result and not the central trend in the forecast. I think it is more accurate to assume that normalization is not possible without a substantial increase in unemployment, perhaps an increase of perhaps 2 percent or more at some point in the future. That’s why I think that in the Fed’s forecast, we are most likely to find ourselves in a stagflationary situation where inflation will fall but not reach the desired level and the economy will be weaker than ever.
Source: Breitbart
