Summers says delta spread elevates inflation concerns

Bloomberg/Simon Kennedy

Repost from 8-9-2021

graphic image of walking a tightrope between night and day

“Former U.S. Treasury Secretary Lawrence Summers said the emergence of the delta variant poses another inflation threat in a U.S. economy that already appears to be overheating.”

USAGOLD note:  The whole transitory argument rests to a large degree on a return to normalcy, and the delta strain, according to Summers, is about to put a crimp in that scenario. He suggests a very difficult path for the Fed to follow – particularly when the top brass are all coming up for reappointment. If the Biden administration is going to replace the current Fed team, one doubts it will be with a more hawkish line-up. Summers, for his part, believes that failing to control inflation now will have “very serious political and economic consequences.” The Fed, it seems, is destined to continue its high wire act – appearing ready to move on inflation without actually doing so.

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