Neoliberal Ghoul, Larry Summers, says Americans must lose jobs to ease inflation.

Morrison71

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(Bloomberg) -- Former Treasury Secretary Lawrence Summers said the US jobless rate would need to rise above 5% for a sustained period in order to curb inflation that's running at the hottest pace in four decades.

"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," said Summers said in a speech in London Monday. "There are numbers that are remarkably discouraging relative to the Fed Reserve view."

Fed policy makers raised interested by 75 basis points on Wednesday, the biggest increase since 1994. In their accompanying outlook, they signaled they see inflation easing from above 6% today to below 3% next year and near 2% in 2024. The median forecast showed unemployment rising to 4.1% by 2024, from 3.6% in May.

"The gap between 7.5% unemployment for two years and 4.1% unemployment for one year is immense," said Summers, a Harvard University professor and paid contributor to Bloomberg Television. "Is our central bank prepared to do what is necessary to stabilize inflation if something like what I've estimated is necessary?"

The Fed on Friday said it would do what is needed to get prices under control, reiterating that price stability is necessary to support a strong labor market and calling its commitment to reining in inflation "unconditional."
 

binsfeldcyhawk2

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He's right...unfortunately.

Fed raises interest rates to bring down inflation....unemployment goes up....that's the way it's worked every time we've had to do this.

There's no easy way out of the current situation.
 
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(Bloomberg) -- Former Treasury Secretary Lawrence Summers said the US jobless rate would need to rise above 5% for a sustained period in order to curb inflation that's running at the hottest pace in four decades.

"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," said Summers said in a speech in London Monday. "There are numbers that are remarkably discouraging relative to the Fed Reserve view."

Fed policy makers raised interested by 75 basis points on Wednesday, the biggest increase since 1994. In their accompanying outlook, they signaled they see inflation easing from above 6% today to below 3% next year and near 2% in 2024. The median forecast showed unemployment rising to 4.1% by 2024, from 3.6% in May.

"The gap between 7.5% unemployment for two years and 4.1% unemployment for one year is immense," said Summers, a Harvard University professor and paid contributor to Bloomberg Television. "Is our central bank prepared to do what is necessary to stabilize inflation if something like what I've estimated is necessary?"

The Fed on Friday said it would do what is needed to get prices under control, reiterating that price stability is necessary to support a strong labor market and calling its commitment to reining in inflation "unconditional."
"Neoliberal Ghoul"

Nailed it.
 

binsfeldcyhawk2

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"Neoliberal Ghoul"

Nailed it.
Who's basically been correct about the current situation...he's just speaking truth.


 

binsfeldcyhawk2

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I'm not surprised to see the boomer generation telling others that it's time to eat a pile of shit for their poor leadership.
Raise interest rates to fight inflation means higher unemployment down the road. Just how it works...

At least he doesn't sugar coat stuff like the "inflation is transitory" crowd.
 
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kc78

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This is what I hate. It's only a problem for the country when poor people get access to money, then we get all kinds of bad things until we beat them back where they belong. But the wealthy continuing to move money from the middle class into their coffers and to continue to deny it to the poor is just good fiscal policy.

Screw that nonsense. It's greed driving inflation for the most part.
 

binsfeldcyhawk2

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This is what I hate. It's only a problem for the country when poor people get access to money, then we get all kinds of bad things until we beat them back where they belong. But the wealthy continuing to move money from the middle class into their coffers and to continue to deny it to the poor is just good fiscal policy.

Screw that nonsense. It's greed driving inflation for the most part.
Greed just became a thing in the last 18 months? What kept inflation down before this? Less greed?

Good lord what a bad take.
 

kc78

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Greed just became a thing in the last 18 months? What kept inflation down before this? Less greed?

Good lord what a bad take.
Inflation has always existed, and it's because the only thing that matters for corporations is more profits whether it harms their employees or not. Capitalism has no ethic.

My take is that our system exists in a self created mechanism where allowing the poor to stop being poor harms the system, but allowing the wealthy to take all they can take is considered proper results. That may keep inflation down, but it's not healthy for a functioning culture. Of course, our primary ethic is profit in America.
 

Titanhawk2

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So fire 11 million workers, who then can take the 11 million currently open jobs - inflation solved?
 
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Who's basically been correct about the current situation...he's just speaking truth.


And so have I. That and $4 will get you Starbucks.

The difference is that Summers only cares about the economic impact. And has been pointed out elsewhere, he mainly cares about the economic impact on elites and corporations. So he doesn't even care about all the economic impact.

At the same time, the economic impact is only part of the picture. When facing a pandemic - even more than was the case during the GOP Recession of 2008 - the economic health of the elites and corporations is NOT what's most important.

Keeping the patient alive is the first order of business. That's where the stimulus packages come in.
 
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kc78

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And so have I. That and $4 will get you Starbucks.

The difference is that Summers only cares about the economic impact. And has been pointed out elsewhere, he mainly cares about the economic impact on elites and corporations. So he doesn't even care about all the economic impact.

At the same time, the economic impact is only part of the picture. When facing a pandemic - even more than was the case during the GOP Recession of 2008 - the economic health of the elites and corporations is NOT what's most important.

Keeping the patient alive is the first order of business. That's where the stimulus packages come in.
There has to be some way to keep a functioning economy without demanding that so much of it be one paycheck away from bankruptcy, or unable to get proper healthcare, or unable to afford almost anything in the way of proper housing. And no, I don't have the solution, but one likely exists... BUT it doesn't allow the elites to continue to make money hand over fist and acquire more than they could ever hope to spend... So we won't investigate them.
 

Menace Sockeyes

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🤣🤣🤣 slavery is worse than murder. Ok. Got it!

He’s right. Labor is at a premium which makes costs go up. Unfortunate side of economics.

I'm not surprised to see the boomer generation telling others that it's time to eat a pile of shit for their poor leadership.
Welcome to capitalism! They were talking about this happening back when Trump pushed through his wildly irresponsible tax cuts after inheriting peak employment under Obama.
 

wcbtee

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So fire 11 million workers, who then can take the 11 million currently open jobs - inflation solved?
That's not the idea.

Try stopping the overbidding for scarce resources. As an example if we pay material handlers $20/hr and they can now get $25 down the street, they take the offer, we then we raise our rates to $26/hr. Company next door raises to $28/hr so on and so on. Each company wants to hold their margins so they raise our prices which directly leads to higher prices to the consumer.

I am all in on pay raises, but what is going on right now due to very low unemployment directly correlates to higher prices to the consumer. You don't need to be an economist to understand that. The other option companies have is to move jobs to low cost countries or automate processes. Both will lead to less demand for workers and will increase unemployment and slow growth rates and slow price increases.

No one wants to return to 8% unemployment, but having unemployment 2.7% is not in the sweet spot either.
 

TylerJ76

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The fact that the feds think we can land this plane smoothly, is just foolish.

Rip the bandaid off and lets get it done.
 

HawkFan1298

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I knew a great guy that worked with Larry Summers in the 1990's at the Department of Treasury and he said Larry was a prick.

CSB.
 
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CaboKP

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Nov 21, 2006
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I recently heard of an engineer leaving my company to earn $120k with under 3 years experience.

This is just one example of a highly in demand job. It is happening at lower pay levels also. That tells me we are out of balance.
 

bhawk24bob

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I recently heard of an engineer leaving my company to earn $120k with under 3 years experience.

This is just one example of a highly in demand job. It is happening at lower pay levels also. That tells me we are out of balance.

The truth is probably somewhere in the middle but I would err on it being out of balance before talent started bouncing around to get paid