Summers Says Fed Should Not Cut Rates Right Now
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- čas přidán 31. 05. 2024
- Former Treasury Secretary Lawrence Summers says he wasn't surprised to see that US inflation rose in March, but the Federal Reserve should not be cutting interest rates now. "On current facts, a rate cut in June it seems to me would be a dangerous and egregious error comparable to the errors the Fed was making in the summer of 2021,” Summers said on Bloomberg Television’s Wall Street Week with David Westin.
It seems like FED might just be complacent for sometime and start cutting too early; Once the rate cutting starts inflation will start to most likely pick up and then FED will start a MASSIVE RATE HIKE to 10% FED FUNDS rate; Hence this outcome will cause and start depression
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Summers is 100% spot on. Real inflation is much higher then the "official numbers." Fed needs to hike rates as Larry says.
Spot on ! .. next move is a hike
which chart
Hike not cut! Get inflation under control now!!
Can we please have Summers replace Powell! He gets it! Why are we even talking rate cuts? They failed in 2021 and they are failing again. They and government caused inflation to be up 30% in the last three years. Destroyed our economy
@@geocam2 disagree it shows they are strong on getting inflation under control
They own all the rentals. Why they want people own home and build equity and not being their slaves
Very, very well said.
Government spending is way too crazy as well.
Congress and the president need a reality check via the treasury and Fed.
Even Paul Volckler during the great inflation had to battle to do what was necessary. Jimmy Carter deserves credit because he basically sacrificed his political career to let Volckler hike rates. I think the fed did the right thing and probably needs to hike another 1% and leave it for a year. Part of the issue nowadays is how well the upper class is doing. Economic inequality- basically two encomies. Society was much more equal back then so monetary policy affected more people.
Rate hikes only hurt low income earners...duh
Carter appointed PV. Go look at rates and you will see more jacking under Reagan and he was the one who kept PV
@@NeoSoulCrew depression will bring everyone back to equal footing and that will hurt the high earners the most 😊
@@user-tn6ui7me4q the largest hikes were under Carter in terms of the magnitude of the hike, the highest rate did occur under Reagan tho
Only reason they wont Volker it is because too many boomers would loose everything and would screw them, the just trying to get to a certain cohort here otherwise rates would had been much higher than this, its all fixed bro.
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Guys, government is over spending. How can inflation come down if one guy (government) is buying everything?
It's worse than that because government is buying everything with money printed out of thin air. Then they have the audacity to pretend they're not the cause of inflation. Imagine producing $ without any good or service exchanged. What they're doing is theft. Leaving taxpayers with the bill in the form of inflation.
Another 1.2 trillion dollar spending bill approved over-night. 10,000 pages that nobody could read in the timeframe where it was proposed and approved (6 hours).
Bingo.
They spend billions of dollars everyday of money that doesn't exist just going to make the dollar worthless overtime through debasement were all fked.
.
Fiscal policy has been an absolute disaster post-Clinton, and the Democrats and Republicans both spend like there’s no tomorrow despite what they say.
Just the idea cutting rates anytime in the foreseeable future strikes me as sheer lunacy. In fact, we are behind on raising rates and have been since the very first signs that inflation was taking off.
IMO, the Fed is simply dangling a carrot for the markets when it even mentions rate cuts, knowing full well it cant do that without ramping inflation higher and higher.
"Why are we even talking about rate cuts? "
Why indeed!
They are of the opinion one swallow can make a summer. That’s why they are resorting to motivated reasoning to justify cutting rates.
unemployment is low and inflation is well above the 2% target. The only reason to cut interest rates is purely political. In my opinion, a Fed Funds rate hike is more likely than a cut.
Not sure. The Fed seems a little more political than usual right now. Have to remember, the party in power now plays hardball. VERY hard ball.
Too much money printing/deficit spending!
It's a trap cause whit out it the house of cards..
Inflation has nothing to do with federal government’s additional 1 trillion dollars of deficit spending every 100 days. Honest, trust me🤣
hike up, and maybe two hikes needed, and make borrowing difficult! Stat!
Summers gets it, Powell and Fed don’t! We need increases in rates. Save us from inflation up 30% over the last three years. Sickening!
I@@tedstriker67432.8% not 30% so funny
About 2 years ago, Powell said there will be some pain. We're not there yet.
If they were dumb enough to cut rates. How many of the 90% could actually buy a home?
Also the black swan has been doing puckering exercises...
They want to make sure there is no crash before the election to help Biden. But even if Trump gets elected he will resort to stupid tax cuts for the rich and cutting regulations which will only skew the inequities more.
Too much deficit spending by the government isn't helping
Thank you Joe Biden.
Correct nobody understands this! 90% if not 99% of the inflation comes from Gov borrowing!
Thank you to our host and guest of stature Summers. Masterfully done
I have asked 20 yr olds do you still dream of having the American dream, they say “ they can’t afford it “ so no. To me when the future didn’t dream of the dream, I think the country has big problems and neglecting the future for the past is a big mistake.
Very insightful exchanges between the host and the Secretary.
Best comment by former Fed Sommers is to open markets. That means lowering tariffs from other countries so that we do not pay ridiculous prices for goods from other countries. We, the consumers
pay the price of higher tariffs, NOT the country selling those goods to you. That is why we cannot buy a reasonably priced EV in the US. Those priced at ten thousand dollars are not allowed to be sold in the USA. It is in the governments interest to keep us ignorant of these facts.
Higher for longer, baby!
The Feds needs to raise the interest rates to 24% like the credit card companies do.
that’s what you pay that’s not what credit card companies do … they are the middle men buying at 5% selling it to you at 24%
That would cause a huge market crash.
Raise rates 2 more times and we will be where we need to be
@@kritikal3172totally agree 👍
@@TGTK-FreeSpeech- Good.
US printing machine goes BRRRRRRRRRRRRRRRRRRRRRRRRR........interest rate raising
One of the things Bernanke did during the GFC was that he introduced the Fed paying interest on reserve accounts. That's part of why the Fed is currently reporting a $130 billion loss. That's money that offsets, for the banks, the effects of higher rates. Current effective rates are much lower than the headline number, and the high inflation and high GDP growth numbers show it.
They need to raise rates!
much higher,purge the greed!
Agree with Larry. Why would rate cuts even be on the table at this point when inflation is nowhere near their target, let alone well within their target.
Since 2019 groceries are up 70%, New cars up 30%, property taxes up 40%. it’s mostly pure greed at work here… workers are not getting wage increases even close to those numbers… “finding bottlenecks” ??? The corporations are not going to reduce prices as long as people keep buying.
Where is the money coming from on the consumer level (70% of GDP) as well as tightened bank liquidity, to keep driving this inflation? I truly thought we would have broken something by now.
Credit cards for one.
we have broken america
Rates should have kept going up.
Interest rates are still historically too low. Dream on about any cuts this year? Wake up
Larry is SO Spot-On here...
Get ready...
"Bumpy" just became the New "Transitory "...
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth.
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A reality check for all these “no landing” “soft landing” voices. He didn’t even get to the National Debt and Personal Debt with inflation going up.
Raise fed rate, get inflation under control
Listening to Larry Summer's countless "um"s and "ah"s is painful, but everything he says is accurate in this interview.
The Fed should just publish right now a calendar showing that each quarter for the next 2 years they are going to raise rates .25 until inflation gets under control. This whole thing is getting ridiculous!
Full interview much better
The question that I want the Fed to answer, with a better response than "we thought it was transitory inflation", is why did they let the rate set so low for so long? The data was there, it was observable to every eye that wasn't under a rock that inflation was a remaining problem. Overall, this could have been avoided, but here we are.
Thank you very much...
The model is toast. 😂
The probability of no rate cuts this year is increasing (to 50/50?)
**scratches face and arms**
"ya'll got any more of them RATE CUTS???"
Scary stuff mam
Lots of PART TIME JOBS, wonderful
Wow. Wish he is still in charge
10% interest rate pls!
Most grocery prices are just straight price gouging
In October, I could see in my business environment that things were slowing down and I believed in the soft landing scenario if this kept up for a few months.
Then the dot plot came out, and everything rallied, surged, rates dropped, transportation accelerated, everything I went against happened.
The Fed was so close then jynxed themselves and punted the ball. Maybe they did it intentionally to draw money out of the economy but who knows.
Why wasn't he thrown in jail after the GFC?
Yes we know
Now there is no interest rate reduction, it seems that there will be no interest rate reduction before the end of the year.What is the Rational and Clear Solution, does it really exist?
It's surprisingly disappointing that neither Dr. Summers or the interviewer mentions the phenomenon of fiscal dominance. This is something that the United States could very well be flirting with. Monetary policy has much less effectiveness when debt to GDP Levels are as high as the United States has right now. Higher rates may in fact be contributing more to inflation now with higher interest expense which inevitably has to be paid for with more debt issuance ie more new money in the economy. This could be offsetting any disinflationary effects higher rates are having in the private sector. The fed and the treasury I think are very well aware of this new phenomenon and are acting accordingly. Dr. Summers needs to get with the picture and stop living in the past
In theory yes. I give thought to the fact if the longer end of the yield curve rises it would remove more liquidity out of the market. Has more people would pursue that bigger yield. Intern remove liquidity. Probably around 7-8% on the 10-year
Larry is smarter than I thought. He is right.
FED need to tighten!
Higher rates will do nothing to slow inflation as long as Biden keeps deficit spending and handing out trillions of dollars to buy votes!
I agree
4:20 “The Fed has lost its way the last six months” Translation- Lobbyists and the White House have had closed door meetings with Powell and the Fed to let them know something needs to be done before November.
BINGO.
Some Really Scary stuff.
The strong dollar policy crushes competition…for American workers. It’s not protectionist to expect currencies to be fairly set. Ours makes US exports non-competitive and then American workers are forced to turn toward unions for fairness. The Fed works to stymy American wages and yet had no desire to head off inflation at first sight. All these things play into November and it’s unfortunate that they all could have been avoided.
Larry Summers should be Treasury Secretary & Fed Chair simultaneously --- that would be the quickest way to get out of this mess.
Shouldn't? They *can't.*
Rate hikes won’t solve the housing problem.
Gov is afraid that borrowing and servicing the mountainous debt at current rates is unsustainable, so they are looking for pretexts to cut rates...but they know that by doing so they will crash their fiat dollar and the citizen with
Rates are too low.
Big bell energy ? lol
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Viņš ir pelnījis labu balvu👍
so smart that he doesn't know who owns the fed ...when he ran it ??
Bankers are already rich. How about the other 2/3s of the citizenery?
a rate hike makes total sense. i don't see how a rate cut would be helpful to the overall situation
Rates need to rise to restrain inflation, but that will lead to a deep recession. Stagflation is the likely outcome!
Larry was a frequent flier on Lolita Express
Protectionist policies are indeed inflationary. If lots of US based workers lose their jobs we will beat inflation. Apologies to those who lose their jobs (millions) for the sake of price stability.
Personally, I’m in favor of pro-US policies. Our nation is better off if the folks can find a job.
Inflation is bad, but it is like a hangover from a great party. The big question is how long will it last?
Pearls of wisdom from the lips of the man who said “the bankruptcy of Enron is the beauty of Capitalism”
Does Powell have the stones to do the right thing?
Central bank digital currency is relevant to today's interest rate environment. If everyone had access to an interest-bearing central bank digital currency, the consumer would have greater bargaining power in the rate markets.
Economics is just pure BS.
Except it provides abstraction over actions of "people" that are affecting your life in a great way.
The Fed will raise rates soon...
J Pow owes POS biden for keeping him in that position, rates will remain where they are or be lowered. I'll be back next year to say I told you so.
No more drill baby drill, replaced by spend baby spend , gold speaks the truth , at its historical high price
Omg, Larry dropping truth bombs! Feel like he just shifted onto the side of next generation. We can’t change the game guys. As with all booms,Fed has to engineer the bust.
Keep voting democrat watch how it will get worse
keep voting Republican and you’ll work until 75, pay more taxes while capital gains get special treatment, say goodbye to social security, and might get a nation wide sales tax.
It was the Fed under _Drumpf_ in March 2020 that caused this runaway inflation.
Lowered rates to 0% AND pumped 20 Trillion (yes, with a T, not a B) into the economy in 4 months, multiplying the money supply by 5x.
Search online for "Fred M1 money supply" and take a careful look at the chart that comes up (Chicago Federal Reserve Bank website). Educate yourself instead of simply repeating hearsay.
@alexcipriani6003 Alex, with all due respect you will end up bankrupting the nation. Liberal policies only worsen inflation and add to debt. Both parties need to cut military spending, foreign aid, reduce burden of illegal immigrants, and cut back on social programs. Or suffer the consequences of stagflation or worse.
@alexcipriani6003 inflation hurts all classes of people except the ultra wealthy. Democrats only think short term, and because of this you will support policies that cause more money printing which brings inflation. The government needs to learn to CUT its spending drastically.
@@purplevincent4454
Agreed.
And I vote Democrat. Not out of choice, but because the alternative is way worse.
Psssssst what about borrowing and debt servicing?
Private sector warrants cutting but public sector spending like no tomorrow so inflation is up.
It’s stagflation folks; and an intractable kind thanks to enormous and ever-increasing budget deficits.
Did he compare today to 1995?? Might as well compare it to pompei
We traded this guy for Janet Yellen. We traded the Orange man for Brandon. I want the Orange man and the mean tweets back.
He shouldn't be surprised. I keep a list of a basket of goods similar to Fed and this inflation increase was known. I can't believe that major institutional houses are sitting there waiting for this number 😯 What a joke 😅
I'm not clear how or why a lot of people think inflation is going back to 2% anytime soon. I hear we don't have enough housing. Higher rates sure isn't going to build more housing. So how is housing not going to just keep going up until enough people are so stressed they start doubling and tripling up? The other reality is oil. We're not out of oil, but we're having a hard time keeping supply up. The world is using more oil as reserves reduce and easy, cheap oil is reducing the fastest. Most goods have an oil component. Food especially uses a lot of oil. As supply falls I don't see how the price or oil will not keep increasing over years going forward.
Housing and oil look like supply problems to me. Maybe 3% or 4% inflation is just the market telling the world ya better make some changes. As rents keep increasing it will cause more rentals to be built. As oil keeps increasing it pushes the market to find alternatives and I don't mean just a new magic fuel. Different ways to do things to reduce fuel costs, plus alternatives.
Surprised Larry does not emphasize the exuberant government spending and deficit as a driver of inflation!
Gotta agree with Larry baby on this one.
No keep them at 4 to 5 % compatible with the countries economies GDP etc
no one mentions that the fed is a privately owned corporation ..and the owner just died ..to whom did he leave this lucrative business .???
Rates actually need to go up, not down
Buy now pay later might have upwards inflationary pressure.
I wonder if lower prices on EV, green energy products, ….. might help with rising inflation?
That’s the point behind the Inflation Reduction Act.
He's right¡¡
I reckon another 1 or 2 0.25 hikes should do the trick.
The trouble is the things going up are not affected by rates. They will probably just hold for another year.
These are normal rates. If anything they meed to go up to stop thos oit of control inflation.
This guy should be fed chair and Powell should be in jail.
I wonder if he is shorting the stock market 🤔
Supply and demand determine prices. Unfortunately, when rates drop finally, I expect that property prices will start to rise again. The demand is there as the millenials are at the age where they are starting households and the supply hasn't grown accordingly.
Maybe (hopefully) I am wrong, but for those who expect prices to stay the same when rates go down, it would seem risky. It might even make sense to get in now while rates are high and refinance when they become more favorable.
All by wef Un disign. To bring in cbdc
It's way worse, Biden's been telling the Fed to cook the books.
Jerome needs to go!!!