The former Secretary of the US Treasury, Larry Summers, said that jobless rates must rise to curb inflation and fix the economy, provoking a robust pushback from the crypto community.
The author Saifedean Ammous, who wrote The Bitcoin Standard, was chief among those who reacted angrily to Summers’ comments, labeling the former Treasury Secretary and the rest of his Keynesian ilk as “deranged sociopaths.”
Economy faces high inflation
The bust-up comes as US consumers face significant financial pressures, with inflation currently at its highest in over 40 years. Despite this, unemployment currently sits at 3.6%. According to Summers, unemployment figures would need to rise above 5% for five years to inflationary woes.
Summers says to achieve higher unemployment the Federal Reserve (Fed) would need to pursue a strict course of harder and faster monetary tightening, raising significantly interest rates. Summers, who served as secretary from 1999 to 2001, likened the task to that faced by former chair Paul Volcker.
“The US may need as severe monetary tightening as Paul Volcker pushed through in the late 1970s early 1980s,” he said as reported by Bloomberg. “We need five years of unemployment above 5% to contain inflation. In other words, we need two years of 7.5% unemployment or five years of 6% unemployment, or one year of 10% unemployment.”
Summers went on to question whether the incumbent chair of the Fed, Jerome H. Powell, would have the steely fortitude required to take all necessary action. “Is our central bank prepared to do what is necessary to stabilize inflation if something like what I’ve estimated is necessary?”
Summers’ incendiary comments came in a speech given in London, but while the economist had attempted to stress that these would be “difficult decisions,” the discussion of illness as thought it was just another financial lever sat very poorly with some.
Saifedean Ammous was among those particularly displeased. Ammous took to Twitter to rail against Keynesians like Summers who he called “deranged sociopaths” who think that inflation can be tackled by “raising unemployment among poor people and ruining their lives.”
Ammous believes a better strategy for the economy would be to stop printing money.
“Keynesians think money printing doesn’t cause inflation,” said Ammous. “Their ideal economic system should oscillate between inflationary booms that enrich the rich and deflationary crashes that impoverish the poor.
“Keynesian criminals truly think that putting poor people out of work, lowering their wages, and making them destitute will help keep prices down, but no government spending or bank bail-out is ever too much.”
Ammous declared that there should be “economic Nuremberg trials” for anyone “promoting Keynesian propaganda” and concluded that being a complete moron would not be an acceptable defense.
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