{"id":1818116,"date":"2023-01-21T06:51:35","date_gmt":"2023-01-21T11:51:35","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1818116"},"modified":"2023-01-21T06:53:16","modified_gmt":"2023-01-21T11:53:16","slug":"larry-summers-warns-of-1970s-style-inflation-crisis-if-fed-pauses-inflation-fight","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/larry-summers-warns-of-1970s-style-inflation-crisis-if-fed-pauses-inflation-fight\/","title":{"rendered":"Larry Summers Warns of 1970s Style Inflation Crisis if Fed Pauses Inflation Fight"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">26<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Flarry-summers-warns-of-1970s-style-inflation-crisis-if-fed-pauses-inflation-fight%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1818116&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47-->\n<div class=\"featured featured-video video-ct\">\n<div class=\"contain\">\n<div class=\"info\">\n<div class=\"caption\">\n<p>Kenny Polcari, chief market strategist at Slatestone Wealth, encourages investors to consider other sectors in &#8216;Making Money&#8217;.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>The <a href=\"https:\/\/foxbusiness.com\/category\/us-economy\" target=\"_blank\" rel=\"noopener\">U.S. economy<\/a> The Federal Reserve will be facing an increased risk of a stagflation crisis in the 1970s if it stops fighting stubbornly high inflation early, said Larry Summers, former Treasury Secretary.<\/p>\n<p>This warning was in response to a <a href=\"https:\/\/ft.com\/content\/02c8a9ac-b71d-4cef-a6ff-cac120d25588\" target=\"_blank\" rel=\"nofollow noopener\">controversial theory<\/a> Some economists, including Olivier Blanchard, former chief of the International Monetary Fund, believe that inflation should be increased to 3% instead of 2%.<\/p>\n<p>&#8220;To suppose that some kind of relenting on an inflation target will be a salvation would be a costly error,&#8221; Summers, a Harvard University professor, spoke during the <a href=\"https:\/\/foxbusiness.com\/category\/world-economic-forum\" target=\"_blank\" rel=\"noopener\">World Economic Forum<\/a> in Davos, Switzerland.\u00a0&#8220;It would ultimately have adverse effects as it did in a spectacular way during the 1970s.&#8221;<\/p>\n<p><a href=\"https:\/\/foxbusiness.com\/economy\/inflation-eases-december-prices-remain-stubbornly-high\" target=\"_blank\" rel=\"noopener\"><strong><u>INFLATION EASES IN DECEMBER TO 6.5% BUT REMAINS STUBBORNLY HIGH<\/u><\/strong><\/a><\/p>\n<div class=\"inline image-ct\">\n<div class=\"m\"><source media=\"(max-width: 767px)\" \/><source media=\"(min-width: 768px) and (max-width: 1023px)\" \/><source media=\"(min-width: 1024px) and (max-width: 1279px)\" \/><source media=\"(min-width: 1280px)\" \/><img decoding=\"async\" src=\"https:\/\/a57.foxnews.com\/static.foxbusiness.com\/foxbusiness.com\/content\/uploads\/2023\/01\/931\/523\/larry-summers-1.jpg?ve=1&#038;tl=1\" alt=\"Larry Summers at the World Economic Forum\"   style=\"display:none\"><\/div>\n<div class=\"caption\">\n<p><span>Lawrence Summers, President Emeritus and Professor at Harvard University during a panel session that took place on Friday, January 20, 2023, at Davos, Switzerland.<\/span><span> (Photographer: Stefan Wermuth\/Bloomberg via Getty Images\/Getty Images)<\/span><\/p>\n<\/div>\n<\/div>\n<p><a href=\"https:\/\/foxbusiness.com\/category\/jerome-powell\" target=\"_blank\" rel=\"noopener\">Federal Reserve Chairman Jerome Powell<\/a> The central bank has repeatedly stated that it is committed to keeping inflation under control and returning to the target of 2%, despite evidence to the contrary that consumer prices are starting to moderate.\u00a0<\/p>\n<p>Inflation fell 0.1% in December according to the government, marking the first monthly drop since 2020. Annually, inflation increased 6.5%. Although it is still about three times the pre-pandemic inflation average, it was 6.5%. This was a sixth consecutive year-over-year slowdown. These signs are growing that higher interest rates are causing the worst inflation bout since 1980s.\u00a0<\/p>\n<p>Wall Street investors are hopeful that the Fed might pause its aggressive rate-hike campaign and reassess the economic effects of tighter monetar policy.<\/p>\n<div class=\"inline image-ct\">\n<div class=\"m\"><source media=\"(max-width: 767px)\" \/><source media=\"(min-width: 768px) and (max-width: 1023px)\" \/><source media=\"(min-width: 1024px) and (max-width: 1279px)\" \/><source media=\"(min-width: 1280px)\" \/><img decoding=\"async\" src=\"https:\/\/a57.foxnews.com\/static.foxbusiness.com\/foxbusiness.com\/content\/uploads\/2022\/06\/931\/523\/powell-1.jpg?ve=1&#038;tl=1\" alt=\"Federal Reserve Chairman Jerome Powell\" \/><\/div>\n<div class=\"caption\">\n<p><span>Jerome Powell, Chairman of the U.S. Federal Reserve speaks at a news conference after a Federal Open Market Committee meeting in Washington, D.C. on Wednesday, May 4, 2022.\u00a0<\/span><span> (Photographer Al Drago\/Bloomberg via Getty Images\/Getty Images)<\/span><\/p>\n<\/div>\n<\/div>\n<p>Summers cautioned however that the central bank should not take pre-emptive measures.\u00a0<\/p>\n<p>&#8220;It would be a grave error for central banks to revise their inflation target upwards at this point,&#8221; Summers said. &#8220;Having failed to attain the 2% target and having re-emphasized repeatedly the commitment to 2%, to then abandon the target would do very substantial damage to credibility. If you can adjust once, you can adjust again.&#8221;<\/p>\n<p><a href=\"https:\/\/foxbusiness.com\/economy\/feds-brainard-expects-interest-rates-remain-high-despite-recent-inflation-decline\" target=\"_blank\" rel=\"noopener\"><strong>Fed&#8217;s Brainard expects interest rates to remain high despite recent inflation decline<\/strong><\/a><\/p>\n<p>He said: &#8220;The counter-factual is not, &#8216;Can we have more inflation and no recession?&#8217; It is, \u2018If we fail to deal with inflation, we are likely to have a more severe recession at some point.\u2019&#8221;<\/p>\n<p>The <a href=\"https:\/\/foxbusiness.com\/category\/the-fed\" target=\"_blank\" rel=\"noopener\"><u>Fed raised its benchmark interest rate<\/u><\/a> In the most aggressive tightening campaign in 80 years, the range was 4.25% to 4.5%. Officials slowed rate increases to 50 basis points at their December meeting, after four consecutive 75-basis point hikes.\u00a0<\/p>\n<div class=\"inline image-ct\">\n<div class=\"m\"><source media=\"(max-width: 767px)\" \/><source media=\"(min-width: 768px) and (max-width: 1023px)\" \/><source media=\"(min-width: 1024px) and (max-width: 1279px)\" \/><source media=\"(min-width: 1280px)\" \/><img decoding=\"async\" src=\"https:\/\/a57.foxnews.com\/static.foxbusiness.com\/foxbusiness.com\/content\/uploads\/2022\/12\/931\/523\/powell-11.jpg?ve=1&#038;tl=1\" alt=\"Fed Chairman Jerome Powell\" \/><\/div>\n<div class=\"caption\">\n<p><span>Jerome Powell, Chair of the U.S. Federal Reserve, attends a Washington, D.C., press conference on November 2, 2022.\u00a0<\/span><span> (Photo by Liu Jie\/Xinhua via Getty Images \/ Getty Images<\/span><\/p>\n<\/div>\n<\/div>\n<p><a href=\"http:\/\/foxbusiness.com\/\" target=\"_blank\" rel=\"nofollow noopener\"><strong><u>CLICK HERE TO READ MORE ON FOX BUSINESS<\/u><\/strong><\/a><\/p>\n<p>The benchmark interest rates are typically moved by central banks in intervals of 25-basis points.\u00a0<\/p>\n<p>The policy-setting Federal Open Market Committee next meets from \u00a0Jan. 31 to Feb. 1; markets widely expect policymakers to downshift further and approve a quarter-point hike, according to <a href=\"https:\/\/cmegroup.com\/markets\/interest-rates\/cme-fedwatch-tool.html?redirect=\/trading\/interest-rates\/countdown-to-fomc.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>CME Group data.<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kenny Polcari, chief market strategist at Slatestone Wealth, encourages investors to consider other sectors in &#8216;Making Money&#8217;. The U.S. economy The Federal Reserve will be facing an increased risk of a stagflation crisis in the 1970s if it stops fighting stubbornly high inflation early, said Larry Summers, former Treasury Secretary. This warning was in response &hellip;<\/p>\n","protected":false},"author":1,"featured_media":1818119,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[15873,5458,6170,7498,4004,5708,4794,4022,3819,9301,15872,3633],"class_list":["post-1818116","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report","tag-1970s","tag-bongino","tag-crisis","tag-fed","tag-fight","tag-inflation","tag-larry","tag-pauses","tag-report","tag-style","tag-summers","tag-warns"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1818116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1818116"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1818116\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1818119"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1818116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1818116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1818116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}