Joe Biden’s stunning New Deal

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It’s usually worth listening to Larry Summers. Although he is too close to Wall St, he has got a good record of forecasting and defining the big numbers of given cycle:

  • Forthcoming Biden stimulus risk inflation.
  • Progressiveness tend to economic “overreach”.
  • Labor is already short before $4tr of new stimulus.

I am not concerned by an outbreak of wage push inflation in the US. The structural forces of disinflation will return over the next year as catch-up growth and COVID stimulus passes, plus China slows.

That said, I do expect a lot more US wage inflation in the coming cycle than in the last. The base from which it will rise is very strong:

This is a great thing for the US political economy and the liberal capitalist world as the battle against autocratic capitalism advances. US inequality has given us all a huge warning about the fate of our system if a Trumpian populist is allowed to run wild.

On that front, the Biden…

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