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Larry Summers, Democratic Party stalwart and currently Harvard professor, does not have a political reason for criticizing the Federal Reserve.
This means, when he attacks the current Fed for its new wokeness we sit up and notice. Summers says that the central bank is failing to control the money supply and is contributing mightily to America’s inflation. In truth, this is not the first time he has sounded this alarm.
Thus, credit to Larry Summers. Credit where credit is due. The Daily Caller has the story:
Former Treasury Secretary Lawrence Summers on Thursday blasted the Federal Reserve and other central banks for not addressing the growing threat of inflation, instead focusing on maximum employment and social issues like climate change.
Summers told attendees at a virtual conference held by the Institute of International Finance that arguments by the Federal Reserve downplaying the long-term risk of inflation are similar to those made by former Federal Reserve chairs like Arthur Burns and G. William Miller, who presided over the 1970s inflation crisis.
The problem lies in the Fed’s current embrace of wokeness. It does not want to limit its responsibilities to the money supply and inflation, but it wants to be fighting climate change. Are these people deranged, or not?
Leading a shift that will stoke serious inflation is Fed governor Lael Brainard. One notes that she is at the top of every progressive’s list of candidates to replace current Fed chairman Jerome Powell. So, we might say that she is promoting her candidacy by sucking up to the radical left in the Democratic Party.
It is also useful to recognize that the climate change hysteria is currently working to destroy the value of American currency.
The Daily Caller reports:
Federal Reserve policy makers announced a more inclusive approach to measuring employment in 2020, going beyond the minimum unemployment rate. The bank has also pledged to keep its near-zero benchmark interest rate even as inflation continues to grow, citing its commitment to expanding the labor market.
Central banks around the world are also focusing more on social issues like climate change. Federal Reserve Governor Lael Brainard, for example, said earlier in October that financial regulators should tell banks how to tackle climate change as a way to monitor threats to the overall financial system.
“We have a generation of central bankers who are defining themselves by their wokeness,” Summers warned. “They’re defining themselves by how socially concerned they are.”
The worse the inflation gets the more drastic the measures that the Fed will need to institute to get it under control. Remember Paul Volcker and the early eighties when he had to raise interest rates to the sky in order to get inflation under control.
But Summers said the Federal Reserve and other central banks haven’t done enough to prepare investors for the measures policy makers will likely have to take in order to reduce inflation.
“If those actions come, they’re going to be very shocking and very painful in financial markets,” he said, according to Bloomberg.
2 comments:
Here's how it works. Say, a city like Los Angeles decides to "tackle climate change" by spending taxpayer money and instituting new regulations rather than fulfill it's required duties. Streets will go unpaved, city employees will be distracted from their actual jobs, and city administration in general will be undermined. I believe we can expect the Fed's emphasis on "tackling climate change" to have similar effects. It's much more rewarding to virtue-signal than to do the damn job they are supposed to do. We are so screwed.
I.m with jmod on this.
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