Larry Summers explains how a decade of policy created fertile ground for inflation

[@rickyricardo9918]

*Larry Summers translated* *Simply put:* There was too much stimulus. *Plainly put:* The period between 2013 & 2020 had low investment + high savings rates driven by demographics & was causing sluggish growth + low interest rates along with inflows into assets - it was a problem. I guestimate the gap between the savings & investment rate was equal to 4% of GDP. In 2021 I was confident that inflation would prevail - fiscal stimulus during the pandemic was 14% of GDP which more than bridged the gap. The prevalent economic forces at this time seem uncertain to me but I don't think we'll be going back to the 2013-2020 time period & the fed should not be too confident in any one outcome. I think fiscal spending (increased national debt), green tech (green washing), friend-shoring & pricing pressures will be positive off-setting forces against the deflationary forces.

[@rickyricardo9918]

Yes Larry but wasn't the low investment the result of what would be accepted as collateral in the world's monetary system? The banking system became risk adverse post GFC & construct "fortress balance sheets" - as per Jaimie Dimon. Also, it doesn't help when the fed not only sucks up the only collateral anyone wants anymore in QE & RRP but also disincentivizes banks to lend in the real economy by offering safe harbor for their $urplu$.

[@phajgo2]

He’s so amazing

[@stevengelber2780]

well said

[@danielhutchinson6604]

Roman's did not gather at Davos. They discussed the effects of a diminished Empire among themselves. The Internet would have been a revealing tool to understand the similarities, as the US Empire begins to fade...... When you can no longer afford to pay the Legions, The Empire begins to die...... This Empire appears to be taking Capitalism with it to the grave?

[@royprovins7037]

Romans also diluted the silver in their coins leading to inflation

[@danielhutchinson6604]

@@royprovins7037 Fiat Dollars are a Promissory Note offering to reward the bearer with another Promissory Note. Pretty cool system......Right? I hear them Romans were trying a lot of solutions. Capitalism has had a pretty good inning? It appears a Relief Pitcher is due to arrive?

[@joshhoffman1975]

Brilliant economic summary.

[@jdzentrist8711]

As a layman I find him both a genius and a prophet, indeed as Cassandra.

[@rickyricardo9918]

Blah blah blah. A lot of fedspeak intended to impress the Davos crowd & maybe obfuscate a hypothesis that can't be quantified. Ironically he cites arithmetic as the "secret sauce" in economics. IDK about you but I found a lot of unintended comedy in this.

[@deedetres703]

"Thomas J Jordan - is the personification of class in this moment, and is the only person one should refer to regarding how to balance a ledger not Summers" - says Brooksley Born

[@paramsingh8746]

he is very proud of himself

[@trumpyla]

When you have his 🧠 and ability to articulate - you should be

[@rickyricardo9918]

@@trumpyla You're right, he's good at fed-speak not unlike Greenspan. He's smart no doubt but the substance of what he said was thin at best if not wrong.

[@bigbag4354]

If I didn't coin push the game. Kill me now.

[@ssuwandi3240]

Since 2013 Abenomics to be precise

[@georgemaximus694]

It’s sounds like a Harvard economics lecture only few understands.

[@rickyricardo9918]

You are right. He's trying to impress the Davos crowd.

[@trumpyla]

The smartest dude alive!

[@rickyricardo9918]

How do you figure?