We need five years of unemployment above 5% to contain inflation — in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment (to bring inflation down). – Lawrence Summers, in June of 2022
The internet is forever, or something like that. Which means oh-so-eminent economist Lawrence Summers will forever be associated with the horrifyingly obtuse view that human beings with wives, husbands and kids must be put out of work to fight inflation by the very governments that are always and everywhere the source of it. More on what inflation is in a bit, but for now it’s useful to behold Summers’s remarkably dense certitude about how to cure what he imagines inflation to be.
In which case it’s easy to say what’s true: while surely very intelligent, Summers is rather light when it comes to common sense. See his inflation cure once again.
From there, let’s be clear that Summers was hardly making an argument unique to him. The belief that inflation’s fix is a function of putting people out of work is accepted wisdom in the economics profession, along with a pundit profession that enables the routine abuse of reason.
Take Wall Street Journal columnist Nick Timiraos. The Journal’s Fed watcher has routinely made a case that the Fed’s rate decisions will be driven by whether or not “the economy doesn’t slow enough to keep inflation declining.”
Read the full article at Forbes
