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ACTIONS OF FEDERAL RESERVE Summers Says Powell ‘Did What He Needed to Do’ in Jackson Hole ... It's Clear Inflation Is Powell's Priority Original article: https://www.bloomberg.com/news/articles/2022-08-26/summers-says-powell-did-what-he-needed-to-do-in-jackson-hole Peter Burgess COMMENTARY I am not impressed by Larry Summers who always speaks with a loud voice but on top of what to me is quite flimsy analysis and understanding. This might not be the fault of Summers, but more my own weaknesses. My view of Summers goes back to the time when he was President Obama's Secretary of the Treasury at as very difficult time, but eventually presided over relatively slow growth of the US economy when much faster growth was needed and likely possible. I realise that GOP Senate Leader McConnell was a big part of the problem at that time, but I think Summers must take some of the blame. The US Federal Reserve Bank has a big job and a limited mandate, and its system of governance seems somewhat confusing. I am not at all clear on what it is responsible for ... nor what constitutes success. I applauded the action of the Federal Reserve in March 2020 at the beginning of the pandemic when it took aggressive action to ensure that the economic slowdown ... lockdown / crash ... caused by the emergence of the Covid pandemic would not trigger massive and contageous bank failures. In my view, this was very successful, and by being successful it is largely forgotten. The Fed failed to handle the run-up tp the financial meltdown of 1908/1909, and, to its credit did not let the same happen as the Covid epidemic roiled the economy in 2020. Under Democrat leadership of Congress ... the Senate and the House ... the Obama administration did a surprisingly good job of pulling the US economy back from the brink. Sadly the recovery progress stalled as soon as the GOP took control of Congress and effectively stopped the stimulus agenda of Obama and the Democrats. The post financial crisis recovery continued, but at a rather modest rate. Leader McConnell was clear that he would do everything in his power to make Obama fail ... and to that end, he did serious damage to the totality of the economy of the USA. This was compounded when Trump became President and the GOP controlled Congress. Rich people were delighted by the roll back of taxation in 2017 and were deafingly silent on the impact this would have on the national debt. No surprise here! Supporters of Trump are able to point at faster growth of the US economy under Trump (until the Covid pandemic) than during the last six years of the Obama adminstration. This was largely due to a change in behavior by the GOP controlled Congress under Trump compared to the Obama years. Republicans are concerned about control of Government spending and the Mational Debt when the Democrats are in power, but conveniently forget about thesa issues when the GOP is in power. This is hypocritical, but the GOP (and McConnell) do not seem to be phased by this. Peter Burgess | ||
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Summers Says Powell ‘Did What He Needed to Do’ in Jackson Hole ... It's Clear Inflation Is Powell's Priority
Fed chair’s speech was a ‘statement of being resolute’ ... Former Treasury chief has criticized Fed for inflation surge By Simon Kennedy @simonjkennedy August 26, 2022 at 12:20 PM EDT Former US Treasury Secretary Lawrence Summers handed out some rare praise for the Federal Reserve, saying Chair Jerome Powell’s latest pledge to restrain inflation was a “statement of being resolute.” Shortly after Powell spoke to fellow central bankers at the annual symposium in Jackson Hole, Wyoming, Summers said the policy maker “did what he needed to do” and that it was clear the Fed’s “overwhelming priority” is pulling back inflation from the fastest pace in four decades. In a brief speech, Powell had signaled the Fed is likely to keep raising interest rates and leave them elevated for a while to stamp out inflation. He said restoring inflation to the 2% target is the central bank’s “overarching focus right now” even though consumers and businesses will feel economic pain. Summers, a paid contributor to Bloomberg TV and a professor at Harvard University, has repeatedly criticized the Fed for failing to spot the recent surge in inflation and then acting too slowly to tackle it. “The Fed is positioned as well as it can be -- given the credibility losses and mistakes that there have been -- with these remarks to manage things going forward,” he said. Summers praised Powell’s acknowledgment that there will be a price to pay for cooling inflation, noting short-term hits to employment and wages were acceptable for ensuring long-term prosperity. Powell “prioritized inflation, making clear that he recognized that that prioritization would have short-term adverse consequences that wouldn’t be easy,” Summers said. The former US Treasury chief also said European Central Bank President Christine Lagarde has “a much harder job” than Powell given the euro area’s inflation, energy price shocks and regional political problems. “It’s going to be a very difficult road for them to walk in Europe,” Summers said. “My suspicion would be that they’re going to have to raise rates more than is currently priced in, but that’s going to come at a time when there’s very substantial recessionary forces.” In this article 2057703D TREASURY Private Company EUR Euro Spot 0.9966EUR-0.0009-0.0902%
| The text being discussed is available at | https://www.bloomberg.com/news/articles/2022-08-26/summers-says-powell-did-what-he-needed-to-do-in-jackson-hole and |