The Glenn Show Laurence Kotlikoff — Fending Off Inflation
In this week’s TGS, my old friend Larry Kotlikoff, an economist at Boston University, is back to talk about some of our most pressing economic concerns. Chief among them is the inflation rate, which has hit a 30-year high. By some accounts, inflation is now threatening to do major, possibly longterm damage to the US economy. But are things as bad as they seem? Larry will take us through his analysis and talk about some other looming economic troubles. If you want to understand how these things work, Larry is your guy.
We begin by discussing just why high inflation poses such a dire threat to the economy. Obviously it’s something to be concerned about, but will it get bad enough to send us the way of Weimar Germany? This leads us to discuss Biden’s recent policy decisions, including the $1.2 trillion infrastructure bill. Larry argues that it’s not as costly as it sounds when you consider that it’s parceled out over the course of a decade. Larry is much more concerned about the fiscal gap, which is enormous and, according to Larry, could eventually lead the US into insolvency. Larry sees this as a problem that can only be solved by responsible political leadership, but we have trouble naming any current politicians with the influence to get it done.
It’s always great to have Larry on the show (even if he has a tendency to make some pretty frightening predictions about the future). As always, I’m interested to know what you think!
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0:00 Why high inflation is a potentially dire problem
9:00 Are we headed the way of Weimar Germany and Argentina?
20:37 How short-term government spending can function as a longterm investment
30:02 The looming threat of the fiscal gap
37:08 Why is the US’s fiscal gap so large compared to that of other countries?
41:30 Larry: We’re on the path to becoming a second-rate country
46:37 Why Larry thinks we should index taxes to inflation
53:36 Can we pay for what we’re spending without printing money?
Links and Readings
Steven Rattner’s NYT guest essay, “I Warned the Democrats about Inflation”
Larry Summers’s WaPo op-ed, “On inflation, it’s past time for team transitory to stand down”
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