"The central irony of [a] financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending."
- Larry Summers 2011
Will they [central bankers] not consider the possibility that ultra-low nominal yield might actually reduce aggregate demand while breeding financial instability, bank failure, 'zombification' and reduced economic dynamism?
- Larry Summers 2019
Larry Summers can be insufferable, but he is also one of the most insightful macroeconomists. He has been talking about poor monetary policy choices for well over a decade, and with the current thinking from central banks, they have not learned much. We have 3% growth, 4.051% unemployment, and inflation still above target (don't forget the average inflation rate idea), and there is still talk about a need for rate cuts. What is the case? Yes, there are those who are hurting in the current economy, but that is still associated with inflation. Asset prices are inflated and the talk is always about a need for policies that will ensure that those prices stay high.
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