Summers: We' re Closer to 70s-Level Inflation Than Most Realize

During an interview aired on Friday’s edition of Bloomberg’s “Wall Street Week,” economist, Harvard Professor, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers argued that “we’re actually closer to being back” to the inflation levels of the 1970s than most realize.

Summers stated, “Look, there’s been an effort, as there always is when you have inflation, to dismiss it as due to specific or temporary factors. That is much more wrong than right. You can see it when you take out all the extreme observations in both directions…you can see it, as I’ve emphasized, by looking at the wages, which are the ultimate source of costs in the economy. We’ve got a pretty fundamental inflation problem in our country. You know, David, I saw something recently that brought this home to me. People think of us as having had 13%, 14% inflation in the 1970s. But that’s only because of the way it was calculated then. If you use the same way we calculate inflation now, it got just above 10% in the 1970s. So, getting to 8.5%, we’re actually closer to being back there than I think most people realize.”

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