Former Treasury Secretary Warns: Inflation Surged to 18% Under Old Metrics

Former U.S. Treasury Secretary Lawrence Summers has issued a stark warning, stating that inflation, when calculated using metrics from before 1983, peaked at a staggering 18%. This revelation comes amid ongoing debates about the accuracy of current inflation measures, which have drawn criticism from various economic experts.

Summers" comments highlight a growing concern among economists regarding the methodologies employed in calculating inflation rates today. He argues that the current metrics fail to capture the true cost of living increases faced by American households. As inflation continues to impact consumer purchasing power, many fear that these outdated calculations could lead to misguided policy decisions.

The discussion around inflation metrics is particularly relevant as U.S. retail investors have accounted for a significant portion of Treasury issuance over the past three years, purchasing between 50% to 70% across various maturities, including 2-year to 30-year bonds, all yielding less than 5%. This influx of retail investment raises questions about market stability and the long-term implications for fiscal policy.

As the economy grapples with these inflationary pressures, analysts warn that a lack of transparency in economic indicators could mislead investors and policymakers alike. The phrase often quoted in financial circles, “If you don’t know who the sucker at the card table is, it’s you,” resonates strongly as uncertainty looms in the financial markets. For further insights on related economic developments, see our earlier coverage on the U.S. money supply hitting historic levels.