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Biden’s $1.9tn package is a risky experiment

The fact that too little stimulus was delivered in 2009 does not mean that far more than that must be right today. 

It is not a philosophical debate, but one over the size, timing and nature of the package. The protagonist has been Larry Summers, former US Treasury secretary and chief economic adviser to Barack Obama, supported by Olivier Blanchard, former chief economist of the IMF. 

Some analysts seem to view a big upsurge in inflation as inconceivable, because it has not happened for a long time. This is a bad argument. 

Many once thought a global financial crisis was inconceivable because it had not happened for a long time. In the 1960s many thought the inflationary upsurge of the 1970s similarly inconceivable.

Martin Wolf FT 23 February 2021


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