Larry Summers says we could be on the brink of another 2008 financial crisis
China's financial markets went into a tailspin last week, setting off panics here in the U.S. and around the globe. It's not clear yet if this translates back into collapses in the real economy of China (and thus threats elsewhere), but at least one person with serious economic know-how is very worried: Former U.S. Treasury Secretary Larry Summers.
As The Guardian pointed out, Summers has been arguing for awhile that advanced economies are caught in "secular stagnation," and he argued just this morning that it would be a mistake for the Federal Reserve to raise interest rates — a move widely believed to be coming shortly.
Rising inflation is one sign of a growing economy the Fed looks for to know when to hike rates. With the turmoil in China, five-year inflation expectations are now at their lowest since 2008.
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"It is far from clear that the next Fed move will be a tightening," Summers also tweeted.
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Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.
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