Summers

His speech to the St. Louis Fed on secular stagnation can be found here. Summers has a much stronger record of being convincing than of being right.  But he makes a few cool points:

The steady decline of real interest rates over the past decades strongly confirms the secular stagnation thesis.

The thesis dominates close but alternative views offered by Rogoff, Gordon, Bernanke or Krugman.

The Fed has chronically underestimated this issue. Their “renormalization” story has worn very thin. There is nothing to renormalize (higher) to.

The monetary policy remedies for the next recession are unconvincing. He goes over forward guidance, QE, negative rates. All have major problems or are basically impotent.

He does not even mention helicopter money. It is not a relevant option.

He makes the case for a major infrastructure program, but without linking it to helicopter money.

There are very good reasons, perhaps even patriotic duty, for the Fed to understate the problems the economy faces and to overstate its confidence in remedies.  Hence they fib.

Bravado aside, the Fed needs to err on the side of avoiding an early return to recession. I would say one thing they need is to see higher inflation expectations, but Summers’ take is broader.