Lawrence Summers, who served as Bill Clinton’s Treasury secretary, rocked the Democratic establishment last year by predicting that his party’s excessive spending would cause inflation. He was right. But he’s wrong now. On June 20 he told Bloomberg that “we need five years of unemployment above 5% to contain inflation”—or perhaps one year of 10% unemployment. That would throw millions of Americans out of work.
Mr. Summers echoed the advice of his uncle, the Nobel economics laureate Paul Samuelson, who famously wrote in 1980, a time of double-digit inflation, that “five to ten years of austerity, in which the unemployment rate rises to an eight or nine percent average and real output inches upward at barely one or two percent per year, might accomplish a gradual taming of U.S. inflation.”
