Larry Summers bleg

Paul Krugman argues that Janet Yellen is a better choice for Fed chair than Larry Summers.  I agree.  But this puzzles me:

First of all, what do we need in a Fed chair? Above all, a committed dove “” someone who will not succumb to the pressure to tighten policy too soon, and almost equally important, someone who will be seen by investors as resistant to this temptation. We’ve just seen how much damage even a hint of Fed hawkishness can do; it’s really critical to not follow the far worse step of making an appointment that gives the wrong signal.

As it happens, both Janet and Larry have good credentials on those grounds, at least in terms of what they’ve said in recent years.

Maybe he’s right, but every Summers piece I’ve seen on monetary policy has been appallingly bad.  I know of no evidence that Summers pressed Obama to appoint committed doves to the Fed.  Or that he complained Fed policy was too tight.  Krugman often complains Fed policy is too tight.

So here’s my request:  Please send me articles where Larry Summers says sensible things about Fed policy over the past 5 years.



33 Responses to “Larry Summers bleg”

  1. Gravatar of the window washer the window washer
    20. July 2013 at 06:24

    and silence………..

  2. Gravatar of Jack Cunningham Jack Cunningham
    20. July 2013 at 06:25

    He seems to be a Keynesian on fiscal policy and most Keynesians share the same view on monetary policy. But he shouldn’t be Fed chairman as one of the architects of the financial crisis.

  3. Gravatar of Bob Murphy Bob Murphy
    20. July 2013 at 07:15

    You’re “puzzled” Scott? Krugman also said upon Bernanke’s reappointment that there’s no one he’d rather see in the position. Yep, Bernanke was the best Fed chair on planet Earth, according to Krugman.

    Summers is a “good guy” like Noah Smith, Scott, and so that’s why Krugman is letting him down easy.

  4. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. July 2013 at 08:20

    “Maybe he’s right, but every Summers piece I’ve seen on monetary policy has been appalling bad.”

    Summers wrote something about monetary policy? It must have slipped my notice. So far as I can tell the last time he wrote anything significant about monetary policy was in 1993.

  5. Gravatar of ChargerCarl ChargerCarl
    20. July 2013 at 09:20

    Delong seems to be a big supporter of Summers for chair, perhaps he knows something we don’t?

  6. Gravatar of marcus nunes marcus nunes
    20. July 2013 at 10:55

    This is the clearest ‘statement of purpose’ by any candidate or potential candidate for Fed Chair. It´s a blueprint that could make the public hold her accountable. Unlike Bernanke on Japan which was several years old by the time he took office, this one is fresh and contemporaneous:

  7. Gravatar of Mark A. Sadowski Mark A. Sadowski
    20. July 2013 at 10:57

    By the way I’m not kidding. December 1993 to be precise:

  8. Gravatar of Jon Jon
    20. July 2013 at 11:47


    Given Romers advocacy for a fiscal multiplier at the national level, she is the last person I’d like to see as fed chairman. Similarly, where is the evidence Yellen understands how monetary policy works? Dove yes. Coherent model of monetary policy, no. Lets go get lars svensson.

  9. Gravatar of Jon Jon
    20. July 2013 at 11:51

    His dissents on Swedish policy were crisp and accurate. Plus the guy is principled as his resignation shows. The names floated for fed chairman in the US show how disfunctional is the public understanding of MP.

  10. Gravatar of J J
    20. July 2013 at 12:07

    Any choice is just the best we can do in a bad situation because Scott Sumner wasn’t picked.

  11. Gravatar of J J
    20. July 2013 at 12:08

    Although, if Sumner were picked, I would be afraid of what Rick Perry would do to him down in Texas.

  12. Gravatar of Negation of Ideology Negation of Ideology
    20. July 2013 at 12:19

    J – I know the odds of Obama appointing Scott Sumner Fed chairman are barely higher than zero, but it is interesting to speculate what the reaction would be. I assume he’d suddenly be attacked by much of the right wing as a liberal. The Rick Perry types would attack him for “printing money to help Obama” rather than printing money to help America, or the unemployed. I suspect he’d be confirmed easily, but with more than half of Republicans voting no.

    Such is the sorry state of the Republican party today.

  13. Gravatar of W. Peden W. Peden
    20. July 2013 at 12:23

    The answer is obvious: Lars Svensson.

    In an age of outsourcing, why not outsource policymaking?

  14. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    20. July 2013 at 13:42

    Here’s another guy who ought not to be considered for Fed chair (or even head bookkeeper);

    ‘Monetary policy consists of printing money to buy assets. …. Fiscal policy consists of selling assets to buy goods, cut taxes, or increase transfers….’

    Taxation is fiscal policy, does that include ‘selling assets’? T-bonds are liabilities to the govt, so that’s not selling assets, it’s incurring liabilities.

    Selling Yellowstone Nat’l Park or an aircraft carrier would be, but…how often does that happen.

  15. Gravatar of W. Peden W. Peden
    20. July 2013 at 13:54

    Patrick Sullivan,

    He seems to mean ‘stimulus’ when he says ‘policy’. Not a good sign!

  16. Gravatar of J J
    20. July 2013 at 15:13

    Patrick Sullivan,

    Even if the government hasn’t created the T-bonds yet, they already exist in the sense that the government has expected future revenue streams. That is an asset. Incurring a liability is pretty much the same as selling the asset defined by future revenue streams.

  17. Gravatar of Geoff Geoff
    20. July 2013 at 15:45

    “So here’s my request: Please send me articles where Larry Summers says sensible things about Fed policy over the past 5 years.”


    So here’s my request: Please send me articles where Larry Summers says “the Fed should target NGDPLT” over the past 5 years.

    Let’s stop pretending.

  18. Gravatar of Scott Freeland Scott Freeland
    20. July 2013 at 15:57


    The choice of Summers would be potentially terrible in other ways as well. He’s not someone who’s exactly free of political baggage. Many on his own side of the isle dislike him and think he’s corrupt and/or incompetent. And to say he’s not the greatest public speaker is an understatement. Can you imagine the kinds of communication problems he might have, vis-a-vis markets?

    Also, he has a reputation for arrogance and insensitivity as an administrator, having been run out of Harvard on a rail and having had some people say some pretty unflattering things about him who worked with him in Obama’s first term. Is that really the reputation the chairman of a conservative institution should have?

  19. Gravatar of Benjamin Cole Benjamin Cole
    20. July 2013 at 17:54

    Krugman is right about a key point however—the markets and the economy are stridently signaling they want sustained QE, while the Fed recklessly drops hint-bombs it may stop QE. Let alone the loose cannons on the FOMC deck firing in every direction at will.

    Aside: Rhetoric is powerful, language is powerful. In discussing monetary policy we, by default, are cast into the lot of using the language of monetarism, with “doves” being those who advocate growth, and where increasing the money supply becomes “debasing” and so forth.

    I still say a necessary part of Market Monetarism is the creation of new catch phrases, such as :”monetary bulls” or “growth-oriented monetary supply.” A tight money supply is “asphyxiating.”

    Summers? Such a modest seeming fellow. Can he learn to be a Market Monetarist?

  20. Gravatar of Mikio Mikio
    20. July 2013 at 18:22

    What damage did “the hint of hawkishness” cause?

    Stocks are back at all time high.

    The emerging markets are down, but they have been under-performing for years now. This year, the under-performance became more pronounced, yes, but the trend was there before.

    I think Krugman might be confusing market noise and a temporary uptick in volatility with “damage”.

    Otherwise, yes, Yellen would be (a lot) better than Summers.

  21. Gravatar of Ricardo Ricardo
    20. July 2013 at 19:01

    Two worrisome points:

    1- In the past week, online wagering odds for Summers as Fed Chair went from 8-to-1 to 5.5-to-1.

    2- A bloomberg board member and former SEC chairman, on radio this week, says the Administration does put some weight on loyalty.

  22. Gravatar of the window washer the window washer
    20. July 2013 at 20:19

    And still silence on the “last five years” request.
    So Scot I think you can presume there isn’t anything.
    He’s two decades out of date it seems.

  23. Gravatar of TallDave TallDave
    20. July 2013 at 21:43

    Found one!

    Those kinds of structural adjustments are very important, but they need to be coupled with measures that would promote demand. And it seems to me that more effort to provide common support and common approaches to the recapitalization of the European banking system, more mobilization of Europe’s overall fiscal capacity in support of growth, further intensified structural reform and a clear bias of monetary policy towards supporting growth are all important elements in the European situation.

    So, there’s that. I could be misreading but I infer a criticism of the ECB there.

    OTOH, virtually everything else he says in that interview is horribly wrong.

    “while monetary policy is still constrained by zero bound”

    Zombie theories really do eat brains.

  24. Gravatar of Ashok Rao Ashok Rao
    20. July 2013 at 22:53

    Been saying this too. Though let me change that last line. Please send me articles where Larry Summers says *anything* about Fed policy over the past 5 years.

    The debate is very distorted on both sides. The anti-Summers crowd is saying nothing that they couldn’t have said about him with regard to his appointment as NEC chair in 2009. And the pro-Summers crowd isn’t saying anything different either (“he’s smart, etc.”).

    That means for the one position charged with an extremely specific mandate, we’re having a ridiculously ambiguous conversation. Here’s a quote:

    “It almost goes without saying that Yellen is far more established as a academic and policymaker insofar as monetary policy. All we need is a quick Google search to see the extent to which this is (perceived to be) the case. As former Treasury chief and NEC chairman – and in general a brilliant academic – Summers is the more eminent personality: yielding 6,310,000 search hits to Yellen’s 467,000.

    But change the query to “[Larry Summers/Janet Yellen] monetary policy”, Yellen comes ahead at 206,000 to Summers’ 131,000. Now I’m not suggesting this is a particularly smart way to judge scholarship on a subject, but it gives a very visceral sense of Yellen’s online footprint insofar as monetary policy is concerned. Moreover, Yellen’s hits are almost entirely pages that are really concerned with relevant policy.

    Deriving from his comparative fame, even Larry Summers’ “monetary policy” search hits are of no relevance. At the top are links to his Wikipedia entry, a brilliant profile comparing Larry Summers and Glen Hubbard, something about healthcare, and”

  25. Gravatar of Ashok Rao Ashok Rao
    20. July 2013 at 23:01

    That said – as I noted – I don’t think LS would be a bad choice. But as an outsider (insiders presumably know a lot more about what he thinks of monetary policy) I just have no way of forming an opinion. But everyone angry at him for deregulation is also missing the forest for the trees – not to mention trees in the wrong forest.

    Fwiw, Miles Kimball’s tweets me that “[he] expect[s] Larry Summers to have similar views on monetary policy to those expressed by @delong on his blog”.

    I don’t know from where such expectations are formed but this, to me, does not sound that bad.

  26. Gravatar of davidpaff82 davidpaff82
    21. July 2013 at 02:48

    comrade summers in 2011:

    “It is far too soon for financial policy to shift towards preventing future bubbles and possible inflation, and away from assuring adequate demand. The underlying rate of inflation is still trending downwards and the problems of insufficient borrowing and investing exceed any problems of overconfidence” (not paywalled)

  27. Gravatar of ssumner ssumner
    21. July 2013 at 05:30

    Jack, Not at all. Lots of Keynesians have supported Fed policy over the past 5 years, and lots have opposed it. I suspect Summers was one of the supporters, whereas Krugman has opposed it.

    TallDave, If monetary policy is still constrained by the zero bound (in the ECB case) how can we infer that the rest of his comment is implied criticism?

    Ashok, There is no reason to be angry at Summers for deregulation, as the experts seem to agree that the deregulation he was involved in (ending Glass Steagall, etc) played no role in the banking crisis.

    Everyone. My commenters have let me down. I’m simply asking for some statement out of Summers that monetary policy has been too tight, at some point over the past 5 years. Even during the period when we were not at the zero bound (2008.) And you give me nothing? We’ve had the slowest growth in NGDP since Herbert Hoover was president–surely you can find a Summers article criticizing the Fed?

  28. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    21. July 2013 at 06:06

    ‘Even if the government hasn’t created the T-bonds yet, they already exist in the sense that the government has expected future revenue streams. That is an asset.’

    Could you point me to something in GAAP that says potential revenues can be carried on your balance sheet as an asset.

  29. Gravatar of J J
    21. July 2013 at 06:47

    Professor Sumner,

    I’m sorry, but I’m not sure you have the readership to create a human flesh search engine. Maybe Tyler Cowen commands a large enough audience.

  30. Gravatar of joe joe
    21. July 2013 at 16:11

    Of course there is that whole Brooksley Bourne fiasco Summers can always fall back on. Derivatives certainly played a large role in the failed “risk is properly mitigated” thoughts among most financial firms. No one understood how these firms were interconnected and derivative regulatory failure was a large part of the reason.

    I’m not sure if the whole “experts seem to agree that the deregulation he was involved in (ending Glass Steagall, etc) played no role in the banking crisis’ is serious or sarcastic. Some ‘experts’ would disagree.

  31. Gravatar of ssumner ssumner
    22. July 2013 at 04:25

    Joe, Derivatives were allowed before deregulation.

  32. Gravatar of Coleton Stirman Coleton Stirman
    22. July 2013 at 10:16

    Yep, I believe these posts proved Larry Summers is not our man.

    It looks as though of the current people listed, and Romer’s previous experience with Obama, it’s Romer vs. Yellen.

    I think Mr. Nunes has a point with Romer’s recent work there, looks as though she’s the best available choice to be an agent of change in global monetary policy.

  33. Gravatar of Alex Richard Alex Richard
    22. July 2013 at 16:44

    I’m fairly confident that that blog post was Krugman trying to say nice things about Summers so as to not make an enemy of him, while at the same time basically endorsing Yellen. “But if the final choice isn’t Janet Yellen, I think the president is going to have to offer a very good explanation of why not, or face a lot of grief from people who want to think the best of his administration.” Strikes me as a pretty clear endorsement in a situation where he doesn’t want to engender ill will on either side.

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