Larry Summers is a smart person. He is one of the youngest persons ever tenured at Harvard, and he is related to not one – but two – Nobel Laureates in Economics. He has been the U.S. Secretary of the Treasury under President Clinton and the Chair of the National Economic Council under President Obama. He has also been considered for Chair of the Federal Reserve System (the “Fed”), which many say is the second-most powerful position in Washington. And those who disagree often do so because they think the Fed Chair is the most powerful position. Also, Larry Summers is a Democrat.
I mention the last fact only because Summers has been critical of the Biden’s Administration’s approach to inflation. In short, he thinks the Administration has been too casual about inflation, arguing it is short-lived and will disappear when the supply-chain problems are resolved.
While kinks in the supply-chain are certainly having an impact on prices, Summers argues the massive stimulus bills passed by Congress in 2020 and early 2021 also have been pushing prices higher. This is because they provided households, businesses, and public institutions with trillions of dollars to spend.