Mar 30, 2021 - Economy & Business

Exclusive: Stiglitz says Summers "didn’t really think through what he was saying" on inflation

Photo illustration of Joseph Stiglitz and Larry Summers with a grid and line graphs.

Photo Illustration: Eniola Odetunde/Axios. Photos: Bloomberg, Stefano Guidi (Stringer) /Getty Images

Nobel Prize-winning economist Joseph Stiglitz says he is unbothered by inflation concerns raised by economists and market participants recently, and thinks former Treasury Secretary Lawrence Summers wasn't thinking when he published his recent op-ed in the Washington Post.

What we're hearing: Summers warned about the potential for "inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability," but Stiglitz told Axios that worry about inflation today is "certainly premature" and "totally unnecessary."

Say it with your chest: "I think he didn’t really think through what he was saying because the irony was that we’ve been in a long period where we’ve been facing lack of aggregate demand at the national and global level," he said in an exclusive interview.

  • "So there’s an awful lot of scope to increase demand, both in terms of the American Reinvestment Act and new infrastructure [bill] to bring us back into a more normal world where we don’t face that deficiency of aggregate demand."
  • "The irony is that he himself had talked about the secular stagnation, which means a lack of aggregate demand."

Be smart: Stiglitz argues that because the U.S. has such high economic inequality it is in a unique position to tamp down on inflation should it arise because not only can the Fed raise interest rates, but Congress can raise taxes without hitting those still struggling.

  • "One of the ironic advantages of having a society with as much distortion inequality as we have is that we can raise a lot of revenue by taxing only those with incomes over $400,000 and corporations," he said.
  • "The very fact that there’s so much money at that top gives us a lot of leeway for imposing taxes."
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