Former Treasury Secretary under Bill Clinton, Larry Summers, joins Bloomberg to answer questions on persistent inflation indicators despite Federal Reserve tightening measures and rising interest rates. Summers, with some carefully chosen words, essentially admits what alternative economists have been warning about all along - That short term positive indicators are misleading and that longer term indicators show impending recession and a sharp decline in the US.
After $8 trillion+ in fiat helicopter money pumped into the economy during the pandemic lockdowns, an impressive spike in retail and service sector activity was the result, spurring a hiring blitz in mostly low wage jobs. The lockdowns led to over 25 million job losses and the covid stimulus bought 12 million jobs back. This heightened activity, however, has been fleeting. Equally impressive has been the aggressive spike in stagflation. High prices continue to hang on and the Fed has little choice but to roll forward on increased interest rates.
The central bank has expressed steady hawkish sentiments in the past few weeks, which have run contrary to media and political claims of easing inflation and an inevitable "soft landing."
In a somewhat similar dynamic to the early-1980s under former Fed chairman Paul Volcker (inflation stats today are calculated far differently from the 80s in an attempt to hide true inflation), the mainstream economic media is starting to realize that interest rates will have to go much higher than they expected and a hard landing is an inevitable outcome.
Summers then hints at what he thinks the solution will be, which of course involves global policy makers and global banking institutions like World Bank. If we were to run Summer's comments through a truth translator, here is what we would likely hear:
"A soft economic landing is not going to happen and the negative data is becoming too obvious to deny. Inflation signals are not relenting and the Fed will continue hiking rates. This will lead to a recessionary crash, so we're going to admit to the issue now in order to avoid looking like complete fools later. In the meantime, we're going to use the ongoing crisis to promote more globalism, which was our intention all along."
A message to Larry - You can't hit the brakes on the car when you've already driven off a cliff.
