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Larry Summers predicts a long battle against inflation—and he’s usually right

September 26, 2022, 9:56 AM UTC
Larry Summers
Larry Summers seen during the 2017 Henry A. Kissinger Prize at the American Academy in Berlin on June 20, 2017 in Berlin, Germany.
Chad Buchanan—Getty Images

Good morning.

Larry Summers occupies a unique position in the political economy of the U.S. From an early age, he was considered one of the brightest minds of his generation of economists. And he’s unique in his profession for having risen to a cabinet post—Treasury Secretary—as well as the presidency of Harvard University. Along the way, he developed a reputation for truth-telling that hasn’t always served him well. 

Most recently, Summers alienated Democrats after the 2020 election by publicly warning another round of COVID relief checks could be inflationary. And he was among the strongest critics of the notion, favored by the administration and the Fed, that the inflation that resulted was temporary. His accuracy on those issues earned him the credibility to convince Sen. Joe Manchin this year to support the misnamed Inflation Reduction Act, enabling its passage. His central insight: putting checks in peoples’ pockets will fuel inflation, but spending government money on physical infrastructure, social infrastructure or energy transformation need not.

So when Larry Summers speaks about the economy, you should listen. He did so recently with Fortune’s Shawn Tully, who visited him at his home for a deep dive into his current view on the economy. You can read Tully’s report here. But brace yourself. His bottom line: rooting out inflation won’t be quick and it won’t be easy. 

I should acknowledge upfront that I consider Summers a friend. I first wrote about him on the front page of the Wall Street Journal in 1985, and our daughters grew up together in D.C., playing on the same soccer team (coached by my wife). But I go back to him whenever the economy is perplexing for the same reason you should: he’s usually right.

Other news below.


Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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