Economist Larry Summers: 'Banana Republicans' Who Minimize Jan. 6 Attack Are Feeding Inflation

( – We’ve heard all kinds of explanations for inflation recently, but here’s a new one from Democrat economist and former Clinton Treasury Secretary Larry Summers, who appeared on CNN’s “State of the Union” on Sunday:

“[I]f I can step out of my area for one — for one second, I think the banana Republicans who are saying that what happened on January 6 was nothing or OK are undermining the basic credibility of our country’s institutions.

“And that, in turn, feeds through for inflation, because if you can’t trust the country’s government, why should you trust its money?

“So I think it’s terribly important that we take the temperature down in Washington, that we recognize behavior that’s just out of bounds of reasonable and decency, we give the Fed the room it needs, we bring down the budget deficit, we take down prices directly through prescription drugs.

“This is a challenge that we can meet, if we’re prepared to be serious about taking it on.”

Summers is not ruling out a recession:

“I think, when inflation is as high as it is right now, and unemployment is as low as it is right now, it’s almost always been followed within two years by inflation, by recession.

“I look at what’s happening in the stock and bond markets. I look at where consumer sentiment is. I think there’s certainly a risk of recession in the next year. And I think, given where we have gotten to, it’s more likely than not that we will have a recession within the next two years.

“That is something we can manage. We have had them for the whole history of the country. We need to be prepared and to respond quickly if and when it happens. But I think the optimists were wrong a year ago in saying we’d have no inflation, and I think they’re wrong now in being — if anyone’s highly confident that we’re going to avoid recession.”

The most recent inflation report, on Friday, showed year-to-year inflation running at 8.6 percent, the highest since December 1981, led by price increases for fuel, food and shelter.

And it could get worse, Summers said, depending “on President Putin and what happens with oil prices. There’s a risk that it will rise higher. And I don’t think it’s likely to fall back very, very rapidly,” he said.

“I think the Fed’s forecasts have tended to be much too optimistic there. And I hope they will recognize fully the gravity of the problem in their forecasts when they meet this week.”


The Federal Reserve may raise interest rates once again to cool the overheated economy.

Summers said rising gasoline prices are “driven by the geopolitical developments around Ukraine,” something President Biden has been saying ever since Putin’s invasion, even though prices were rising before that.

“It’s hypocrisy in the extreme when people…say we need to stand strongly with Ukraine, and then blame the administration for the fact that gas prices are higher than they were a year ago. I have been disappointed by some of the almost demagogic statements that have been made in that regard,” Summers said.

“I think there are things we can do about inflation. The president said something very important — did something very important when he met with Chairman Powell and underscored his respect for the independence of the Fed and made clear he thinks the Fed needs to do whatever is necessary, even if it’s painful, to reduce inflation.

“I have advocated that we need a much more strategic tariff policy vis- a-vis China that takes tariffs down and therefore takes prices down for American consumers and for producers.”

Summers advocated lifting “many” of the tariffs imposed on China by President Donald Trump:

“We should focus on what’s important, not raising input prices for American producers, so they’re less competitive, which is what much of those tariffs do. Instead, we should be focusing on things that allow the leakage of key technologies to China and the like.

“We should pass at long last some kind of legislation, ideally on a bipartisan basis, that would raise the vastly excessive Trump tax cuts, join the world in taxing corporations adequately, take down prescription drug prices. All of that would operate to reduce inflation. So there are things we can do,” Summer said.

And all of those elements – reducing prices elsewhere to supposedly compensate for higher food and gasoline costs – are part of Biden’s Build Back Better agenda.

Once upon a time, in February 2021, Summers warned in a Washington Post op-ed that while the Biden stimulus plan was “admirably ambitious,” it “brings some big risks, too” — including inflation.

Biden is not done stimulation: He now wants to raise taxes on the wealthy, and spend the money on programs that lower prescription drug prices and subsidize child care for some Americans.


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