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Sociology, But With Money
Stop the presses: Larry Summers has something constructive to say about inflation in the US and the Fed's response to it.
After almost two years of fatalistic lamentations for a macro conjuncture destined to dead end in some kind of stagflation, Summers offered what, for him in 2022, counted as an optimistic assessment while speaking to Bloomberg's David Westin for this week's installment of "Wall Street Week."
"Yeah, look, I think we are in better shape than I thought we were," he said, asked
The risk is a hard landing as supply side problems unwind and tighter monetary policy really starts to bite. The fun has only just begun.
It appears Summers was visited by one or more of Dickens’ Christmas Ghosts in the last two or three weeks. What you report about his current thinking seems quite sensible. I also agree with Ackman that 2% inflation in ’23 is delusional. The irony is that the Fed kept chasing their magical 2% goal for many years and just couldn’t get inflation to get that high. Now our heavily perturbed system has suffered a catastrophic break above the old goal which is probably still not readily available, although on the other side of paradise.
I find it easy enough to predict “with precision” what humans and markets will do on any given day. It’s accuracy that I have trouble with.
“ Economics is just sociology with money.”
Robert Prechter’s Elliottwave site has been illustrating this for years. They call it “socionomics.”