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A look at Larry Summers’ comments on inflation

Yahoo Finance Editor-in-Chief Andy Serwer breaks down recent comments on inflation made by Larry Summers, former Treasury secretary.

Video Transcript

DAVE BRIGGS: Welcome back. Former Treasury Secretary Larry Summers has been outspoken on inflation. And it turns out he may have been spot on. Yahoo Finance editor-in-chief Andy Serwer had a chance to talk with Summers, who has been critical of the administration for quite some time.

ANDY SERWER: Yeah, it goes back, Dave, to February of 2021, 15 months ago, where he did a piece in the "Washington Post," basically saying that the American Rescue Plan really put us at risk of having very sustained and persistent significant inflation. And a lot of people push back about that. But it turns out, as you said, he was probably right. I mean, some people say, oh, well, it was actually supply constraints. His point is demand, that we had so much money coming into the system, that that's what's pushed prices higher.

And he acknowledges supply constraints, which means, of course, COVID supply chain problems and Ukraine and things like that. But the real problem was money coming into the system.

SEANA SMITH: So how much worse does he think it could potentially get if we don't use what we need to do in order to resolve this issue? Are we talking about something that could last for many, many months?

ANDY SERWER: Well, you know, he was pounding the table earlier and saying the Fed was behind the ball. And he wrote sort of a series of articles about that. And again, Fed governors, like Clarida and Evans, were pushing back against him. Obviously, as you said, no friends in the Biden administration. And by the way, just a quick second on that. A lot of people sometimes talk smack about Larry Summers, but you've got to hand it to him, because he pushed-- he said something that didn't make his own party happy, right?

A lot-- and he calls himself. He's a self-described progressive. He made the Biden administration unhappy and other progressive economists. But he said it because he said he thought it was true. And as far as where we are now, the Fed is catching up to his thinking in terms of rate hikes.

RACHELLE AKUFFO: And I wanted to ask you about Davos, which is coming up, and Larry Summers' view on that, obviously, holding his-- part of his own event also recently. Talk about what we can expect there and his thoughts on what we could see come out of Davos.

ANDY SERWER: Yeah, Rachelle, I mean, Davos is back. They've tried to jumpstart it a few times during COVID. And it's in May this time around, usually in January. It'll be interesting to see just how much of the real event they actually are able to pull off. I mean, it looked like it's supposed to be full bore.

But on the other hand, I know there are some CEOs and other leaders who aren't going. So I'll be interested to see. And then there's always the question, Rachelle, of, how much really gets done at Davos? Now, how do I defend myself going then? Well, easily, because we have get a lot of great interviews. As far as the bloviating goes, there's a lot of bloviating, you guys.

SEANA SMITH: There is.

ANDY SERWER: No doubt, right?

DAVE BRIGGS: The bloviating capital of the world. And then no snow, no Canada Goose coats, so that'll be nice.

ANDY SERWER: Yeah, that'll be nice, except as I was telling you guys, it's supposed to rain.

DAVE BRIGGS: Ugh!

ANDY SERWER: Enough of the whining, no whining.

SEANA SMITH: Although, Andy, last time--

DAVE BRIGGS: Andy, enjoy it.

SEANA SMITH: --I was with you, it was the most snow they had gotten in 18 years, so a little bit different climate.

ANDY SERWER: Yeah, right. Also, you go with me next time, Seana. We'll be sure to bring some boots.

SEANA SMITH: We'll see. We'll see what happens.

DAVE BRIGGS: Have fun, sir. Thank you.

ANDY SERWER: Thank you, guys.