No about Larry Summers. He gets debt deflation, from MarketWatch:
A central tenet of Federal Reserve policy — that a central bank should remain independent from the national government — is outdated, in light of the lack of demand suffocating the economy, said former Treasury Secretary Larry Summers on Thursday.
Central bank independence “comes from an understanding of the macroeconomic policy problem that is not relevant to current times,” Summers said in a speech at the International Monetary Fund.
Central bank insulation was needed in the 1970s and 1980s to combat inflation, Summers said. That’s because the White House and Congress sometimes saw the short-run benefits of unexpected inflation, while the Fed kept its eyes on the long-run costs, he said.
But that was yesterday’s problem, Summers said. The economy now faces secular stagnation, or a chronic lack of demand.
To fight this, the Treasury should be issuing bonds with long maturities taking advantage of current ultra-low interest rates, Summers said. And the Fed should try not get in the way.
“Reaching that conclusion will require somewhat different thinking that we’re accustomed to in terms of the degree of cooperation between governments and central banks,” Summers said.
In the immediate aftermath of the financial crisis, the Treasury and the Fed often worked at cross purposes. he said. While government spending was rising and the Treasury was selling debt, the Fed was moving in the opposite direction, buying bonds though quantitative easing program for the purpose of shortening the maturity structure to provide stimulus.
In the future, Summers said the two agencies should cooperate to make sure the full benefits of the stimulus reach the economy.
Summers said he was aware that market experts would be leery of such cooperation between the fiscal authority and the central bank out of a concern that inflation may jump.
“I regard that as a virtue, rather than a vice, of the suggestion that I am making in our current environment,” the former Treasury secretary said.
One step further towards helicopter money and the “deleveraging stimulus” that will eventually come.