Larry Summers says we could be on the brink of another 2008 financial crisis

Lawrence H. Summers
(Image credit: Jason Alden/WPA Pool/Getty Images)

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.

See more

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.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

"It is far from clear that the next Fed move will be a tightening," Summers also tweeted.

To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us
Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.