Summers says recession more likely than soft landing

Bloomberg/Michael Sasso/4-14-2022

“[W]e had about 35 years price stability between the mid-eighties and 2021. And by that definition, we have lost price stability in the U.S. Inflation is now the number one economic issue. It’s driving vast erosion in confidence in government. And the Fed has to do what’s necessary to restore a sense of price stability. I can’t say exactly what that means in numerical terms, but I know that we are well away from it now in the judgment of the American people.”

USAGOLD note: Summers continues to channel Paul Volcker in his approach to inflation, even stating he “would like to see the Fed signal a commitment to raise interest rates until real rates are clearly positive, or until it’s clear that price stability has been restored.” Thus far, the Fed has offered no indication of pushing policy toward a positive real rate of return.