Bloomberg Audio Studios, Podcasts, Radio News returned to our very special contributor here on wal Street week. He is Larry Summers of Harvard, So Larry, welcome back. It's been a very consequential week. We of course had the FED chair giving a news conference with the decision, We had ecidata, and then we had the jobs numbers at the end. What do you make it all?

Bloomberg Audio Studios, Podcasts, Radio News returned to our very special contributor here on wal Street week. He is Larry Summers of Harvard, So Larry, welcome back. It's been a very consequential week. We of course had the FED chair giving a news conference with the decision, We had ecidata, and then we had the jobs numbers at the end. What do you make it all?

Look, there's been a lot of movement, but I don't know that we're in a fundamentally different place than we were at the beginning of the week. We have been realizing now for several months that disinflation is not on the secure path that the FED had hoped it would be a few months ago. That's why the market has moved to go from six cuts this year to about one cut this year. And that has been a broadly appropriate move on the part of the mark And it was a blunder, frankly, of the FED to be as confident as it was about the prospect of disinflation. If you add up this week's numbers, what did you get? You got an ECI that was disturbing on the high side, suggesting that wage inflation wasn't coming down, that service sector inflation wasn't likely to be coming down in the way people hoped. You've got a housing number suggesting more housing inflation than many people had been expecting in the presence of seven percent mortgages, and then you got a relatively soft number this morning and some corroborative ism evidence for that that reminded everybody that the economy may well not be on fire, the inflation may not accelerate. So I think you're at the end of it all about where you were at the beginning of the week, with a sense that the most likely thing is no cut or a little bit of cutting this year, that there's some risk that sometimes happens the economy will slide off suddenly, but probably greater than that risk is the no landing kind of scenario where inflation remains robust. So I think everybody's going to have to be watching all this data very closely, and ironically, the more we learn, it's not really true that the more we know in terms of the uncertainties about the economy at this point.

Look, there's been a lot of movement, but I don't know that we're in a fundamentally different place than we were at the beginning of the week. We have been realizing now for several months that disinflation is not on the secure path that the FED had hoped it would be a few months ago. That's why the market has moved to go from six cuts this year to about one cut this year. And that has been a broadly appropriate move on the part of the mark And it was a blunder, frankly, of the FED to be as confident as it was about the prospect of disinflation. If you add up this week's numbers, what did you get? You got an ECI that was disturbing on the high side, suggesting that wage inflation wasn't coming down, that service sector inflation wasn't likely to be coming down in the way people hoped. You've got a housing number suggesting more housing inflation than many people had been expecting in the presence of seven percent mortgages, and then you got a relatively soft number this morning and some corroborative ism evidence for that that reminded everybody that the economy may well not be on fire, the inflation may not accelerate. So I think you're at the end of it all about where you were at the beginning of the week, with a sense that the most likely thing is no cut or a little bit of cutting this year, that there's some risk that sometimes happens the economy will slide off suddenly, but probably greater than that risk is the no landing kind of scenario where inflation remains robust. So I think everybody's going to have to be watching all this data very closely, and ironically, the more we learn, it's not really true that the more we know in terms of the uncertainties about the economy at this point.

So I suspect that Shairpower would agree with you, we need more data. He likes to data. He's the data dependent as they say. At the same time, what I took away, at least from his news conference this week was a little bit different from the no landing possibility. It was sort of, we're on the right course. It's just going to take us longer to get there. We are restrictive in what we're doing, and we will get there and we don't need to consider hikes. Is that a fair interpretation what he said, and if so, is that where he should be.

So I suspect that Shairpower would agree with you, we need more data. He likes to data. He's the data dependent as they say. At the same time, what I took away, at least from his news conference this week was a little bit different from the no landing possibility. It was sort of, we're on the right course. It's just going to take us longer to get there. We are restrictive in what we're doing, and we will get there and we don't need to consider hikes. Is that a fair interpretation what he said, and if so, is that where he should be.

He's much more confident the policy is restrictive than is warranted in light of the various factors we've talked about pushing up the neutral interest rate, in light of good reasons to think that spending may be less intrasensitive than had previously been supposed, because, for example, higher interest rates with all the government's short term debt mean more income for people. I think that the Chair is making a mistake if he is confident that policy is meaningfully restrictive right now. So, yeah, I have never said that I expect the next move to be a hike. I just think there's more of a possibility that that's going to be necessary than I think has been the view at the FED, and to some extent has been the view in the markets. But I think you're characterizing the chair's attitude right. I think if you look at the FED, their tendency going back quite far, most notably in twenty twenty one, has been to take strong views when the data run against those strong views, to retreat less rapidly than they should from the strong views that they have taken. And I think we're seeing another example of that on the question of whether monetary policy is significantly restrictive. We don't know. It could turn out to be, but we don't have a basis for confidence that it is.

He's much more confident the policy is restrictive than is warranted in light of the various factors we've talked about pushing up the neutral interest rate, in light of good reasons to think that spending may be less intrasensitive than had previously been supposed, because, for example, higher interest rates with all the government's short term debt mean more income for people. I think that the Chair is making a mistake if he is confident that policy is meaningfully restrictive right now. So, yeah, I have never said that I expect the next move to be a hike. I just think there's more of a possibility that that's going to be necessary than I think has been the view at the FED, and to some extent has been the view in the markets. But I think you're characterizing the chair's attitude right. I think if you look at the FED, their tendency going back quite far, most notably in twenty twenty one, has been to take strong views when the data run against those strong views, to retreat less rapidly than they should from the strong views that they have taken. And I think we're seeing another example of that on the question of whether monetary policy is significantly restrictive. We don't know. It could turn out to be, but we don't have a basis for confidence that it is.

As Hilari. Besides the data, the wealth of data that came in. A big topic in the news this week was the Japanese yen and what's going on exactly the yen, whether the government there is intervening or not intervening to sort of support the end when it went up to one sixty. Actually, you have some experience with intervention and currencies. Give us where you think we are right now. And of course this is related to the FED because part of the issue is if the FED stays higher for longer, it supports the strength of the US dollar.

As Hilari. Besides the data, the wealth of data that came in. A big topic in the news this week was the Japanese yen and what's going on exactly the yen, whether the government there is intervening or not intervening to sort of support the end when it went up to one sixty. Actually, you have some experience with intervention and currencies. Give us where you think we are right now. And of course this is related to the FED because part of the issue is if the FED stays higher for longer, it supports the strength of the US dollar.

Given the massive size of the capital markets. I think the evidence is reasonably clear that intervention doesn't work, even in the scales that the Japanese engaged in. It's just overwhelmed by the broad magnitude of private sector capital flows. That said, nations tend to intervene when currencies have gotten very far from normal levels, and when they've gotten very far from normal levels, they sometimes bounce back. So I wouldn't want to confidently presume that the end will devalue further from here. It could go either way. But even if the end does appreciate, I'm going to attribute that much more to snapback, then I'm going to attribute it to the efficacy of intervention. But I think this points up an important issue, which is that the dollar is extremely strong right now. That's been a factor that's contributed to our relatively favorable inflation performance.

Given the massive size of the capital markets. I think the evidence is reasonably clear that intervention doesn't work, even in the scales that the Japanese engaged in. It's just overwhelmed by the broad magnitude of private sector capital flows. That said, nations tend to intervene when currencies have gotten very far from normal levels, and when they've gotten very far from normal levels, they sometimes bounce back. So I wouldn't want to confidently presume that the end will devalue further from here. It could go either way. But even if the end does appreciate, I'm going to attribute that much more to snapback, then I'm going to attribute it to the efficacy of intervention. But I think this points up an important issue, which is that the dollar is extremely strong right now. That's been a factor that's contributed to our relatively favorable inflation performance.

Larry, I'm sad to say that the disputes on college campuses growing out of the Israeli Gods' situation have continued some ways have gotten worse. Actually, this week we saw police going in various places here in New York at Columbia, but across the country. You've been outspoken in the past on this issue as a former college president, yourself at Harvard and is now a scholar at Harvard. What do you think is going on? And more important, perhaps what should the colleges be doing? What should the leadership be doing?

Larry, I'm sad to say that the disputes on college campuses growing out of the Israeli Gods' situation have continued some ways have gotten worse. Actually, this week we saw police going in various places here in New York at Columbia, but across the country. You've been outspoken in the past on this issue as a former college president, yourself at Harvard and is now a scholar at Harvard. What do you think is going on? And more important, perhaps what should the colleges be doing? What should the leadership be doing?

Right now? This is very depressing and worrisome to me. As I've said on your show before, David, I think the United States is in the most dangerous geopolitical moment we've been in probably two generations, given what's happening in China, Russia, Raan, North Korea, and so forth. And it seems to me that anybody sitting in one of those countries has to be taking great encouragement from the spectacle that is being made by our young future elits on so many of our leading college camps, and even more by the craven responses that are typifying university leaderships. I have not been as appalled by Harvard ever, as I am by the fact that a cathia has rested over the John Harvard statue and a Palestenian flag has been placed in the hand of John Harvard, that iconic statue on the Harvard campus. And you can debate whether administrators should be sending in police, and I think that should always be a last resort, but that they can't keep John Harvard unadorned with hamas supporting symbols. That just is appalling to me. I don't think there's any question that as a double standard throughout the Ivy League and elite higher education on anti Semitism and other forms of prejudice. The lawsuits are largely correct in making that suggestion, and I think this is a failure of a fundamental part of education, the imbuing people with an ability to contemplate serious moral issues in serious ways. There is idealism among some of those protesting, though some of them are being driven by outside agitation and outside funding. And I respect the idealism of those who live by a theory of civil disobedience and are prepared for their cause to accept punishment. But when I see spectacles like the law review of Columbia University demanding that exams be canceled or grading be stopped this year because of what happened on that campus, I think that bespeaks a kind of decadence that causes me to be very worried about the future of our universities and about the future therefore of our country. I wish we could find ways of getting things back on track.

Right now? This is very depressing and worrisome to me. As I've said on your show before, David, I think the United States is in the most dangerous geopolitical moment we've been in probably two generations, given what's happening in China, Russia, Raan, North Korea, and so forth. And it seems to me that anybody sitting in one of those countries has to be taking great encouragement from the spectacle that is being made by our young future elits on so many of our leading college camps, and even more by the craven responses that are typifying university leaderships. I have not been as appalled by Harvard ever, as I am by the fact that a cathia has rested over the John Harvard statue and a Palestenian flag has been placed in the hand of John Harvard, that iconic statue on the Harvard campus. And you can debate whether administrators should be sending in police, and I think that should always be a last resort, but that they can't keep John Harvard unadorned with hamas supporting symbols. That just is appalling to me. I don't think there's any question that as a double standard throughout the Ivy League and elite higher education on anti Semitism and other forms of prejudice. The lawsuits are largely correct in making that suggestion, and I think this is a failure of a fundamental part of education, the imbuing people with an ability to contemplate serious moral issues in serious ways. There is idealism among some of those protesting, though some of them are being driven by outside agitation and outside funding. And I respect the idealism of those who live by a theory of civil disobedience and are prepared for their cause to accept punishment. But when I see spectacles like the law review of Columbia University demanding that exams be canceled or grading be stopped this year because of what happened on that campus, I think that bespeaks a kind of decadence that causes me to be very worried about the future of our universities and about the future therefore of our country. I wish we could find ways of getting things back on track.

Larry, thank you so very much for being with us as Larry Summer is our special contributor here on Wall Street week

Larry, thank you so very much for being with us as Larry Summer is our special contributor here on Wall Street week