Showing why the economy is likely to go in reverse under President-elect Joe Biden, 66-year-old former Treasury Secretary Larry Summers says increasing the direct payments of $600 to $2,000 would be “inflationary,” something so preposterous, so off-the-wall, so ignorant, it shows Summer should be last one Biden consults for economic advice. Summers, whose training is in economics, opined Jan. 18, 2005 that the reason girls-or-women are not represented in math, engineering and sciences are due to biological differences with boys-or-men. “Research in behavioral genetics is showing things previously attributed to socialization weren’t due to socialization after all,” Summers told an audience at a conference on women in science and engineering. Essentially, Summers told his audience that women were genetically inferior to men in math, sciences and engineering.
Summer remarks as President of Harvard University were not different than Stanford University physicist Engineering Professor William B. Shockley who cited research that blacks were genetically inferior to whites when it cam to math, sciences and engineering. Whether Summers got his prejudice toward women from Shockley is anyone’s one’s guess. But Summers’ public remarks caused such an uproar he was hounded out of Harvard June 30, 2006. Citing anything Summers says today is bound to create controversy, especially warning of how $2,000 stimulus payers would create inflation. Summer’s knows how to get notoriety, having done himself in at Harvard with profoundly ignorant statements about female genetics. Summers, former Treasury Secretary under President Bill Clinton, now reveals in knowledge of basic economics has rusted into obsolescence.
Summer’s went on record essentially opposing any direct stimulus payments to American consumers. He’s “not even sure I’m enthusiastic about the $600 checks,” something President Donald Trump objected to the new bipartisan stimulus bill currently approved in the House and Senate. Federal Reserved Board Chairman Jay Powell, 67, has practically stood on his head to get Congress to approved new stimulus. Powell and his members of the Fed’s Open Market Committee [FOMC], that periodically sets monetary policy, i.e., interest rates, strongly encouraged Congress to pass a much stimulus as possible. Powell sees the Federal Funds Rate, the rate the Fed charges commercial bands to borrow cash, staying a near zero for at least until 2022, if not 2023. Yet Summers acts like he has better metrics than the Fed to warn Biden about the negative effects of more stimulus.
Summers said the current bipartisan stimulus bill “probably would pay out about $200 billion to $250 billion a month the next three months,” Summers said, suggesting that anything more would be inflationary. “The level of compenstation is running about $30 billion a month below what we would have expected it would. GDP is running about $70 billion a month below what were would have expected it would . . . We have stimulus already, much more that filling out the hole,” Summers said. Summers likes to spend time crunching numbers but he doesn’t see the hardship caused by the Covid-19 crisis, shutting down state economies and driving ordinary folks into unemployment, default, bankruptcy and homelessness. Summers doesn’t see the need for any economic stimulus to stave off a recession possibly depression. Many ordinary Americans can’t pay their rent or basic bills.
Apart from certain asset classes like real estate, precious metals and certain tradable jewelry and art, the consumer economy has been in the tank. Deflationary pressure, not inflation, has led the Fed to keep interest rates at rock bottom. Summers seems to be in a different world worried about stimulus creating runaway inflation. While the National Retail Federation [NRF] projects a 3.5% to 5.2% increase in 2020 from 2019, it doesn’t mean that brick-and-mortar stores have done well across the country. Internet sales at Amazon.com or big box stores like Costco seem to be hanging on but the vast majority of retail sales look sluggish. “And given that lots of the hole is not from the fact that people don’t want to spend, but because they can’t spend—they can’t get a flight or go to a restaurant—I don’t necessarily think that the priority should be on promoting consumer spending beyond where were are right now,” Summers said.
Biden should stop relying on economic advice from discredited Clinton-era Cabinet officials. Biden doesn’t recall that by the time Summers led the Treasury Department July 2, 1999 to Jan. 20, 2001, the economy was in the dot.com bubble crash, with the stock market melting down about 40%. Summer’s ignorant remarks about the genetic inferiority of women for math and science should exclude him from giving any advice, certainly not about “behavioral genetics.” Fed Chairman Powell has made clear the urgent need for economic stimulus, not worried at all about over heating the economy. Handing out $2,000 checks to Americans would be a “pretty serious mistake that would risk a temporary overheat,” Summer said. With reasoning like that it’s clear Summers should go quietly into retirement, not fit to provide any real economic advice to the President-elect or anyone else.
