Surging inflation is both making Americans poorer and more inequal. Larry Summers, who served as Treasury Secretary in the Obama Administration, puts the blame squarely where it belongs: excessive government spending.
Summers is well regarded within the economics profession and has held important roles in the Clinton and Obama Administrations. As a Democratic party insider Summers’s criticisms of the economic policies of the current administration are revealing.
In an interview with Bloomberg, Summers discusses out how the massive amount of government spending coming out of Washington is driving up prices:
“I did what I thought was a straightforward analysis of the situation. I looked at how short incomes were of trend. And I saw that they were about $25 billion or $30 billion short of trend each month. And that that number was declining. And then I saw that the proposed transfer payments and other stimulus represented close to $200 billion a month. And so I thought if you were filling a $30 billion hole with $200 billion of spending, there was likely to be some overflow and that overflow would translate into inflation.“
Summers also points out that Biden and the Democrats inflationary spending is making most Americans poorer. He says:
“first just on the facts, this period of high inflation has coincided with more rapid, real wage reduction than we had seen previously. So for the majority of workers it’s working out badly so far, not working out well.“
Nor does Summers let the Federal Reserve off the hook. In an opinion piece in the Washington Post, Summers points out that the Fed was wrong and continues to be wrong about the causes and persistence of inflation and is failing to take measures to contain inflation.
Here at GOUSA, we’ve been following the inflation story closely. We’ve blogged about how inflation is driving a rise in inequality in the United States. We’ve also blogged about how inflation is making Americans poorer because for most of us, our pay packages are not keeping up with rising prices.
And we will be holding our political class accountable for the economic havoc that their policies are inflicting the American people. Our OppScore rating system penalizes politicians that support excessive and wasteful spending. To learn more about it, visit the OppScore page on this website.