Larry Summers: "History Will Overwhelmingly Approve QE"

Tyler Durden's picture

For anyone who still suggests, incorrectly, that Larry Summers was the "wrong" choice for Fed Chairman just because he would promptly end QE the second he was elected as the erroneous popular meme goes, we have one soundbite from his recent Bloomberg TV interview refuting all such speculation: "if you had to say, should we have used this tool or should we not have, I think the answer is overwhelming that we should have." He had some other amusing logical fallacies (including discussing whether the market is in a bubble) all of which are transcribed below, but the best one is the following: "I think it does bear emphasis that the people who were most appalled by it are the people who have been predicting hyperinflation around the corner for four years now and they have been wrong at every turn." And let's not forget that "subprime is contained" - until it isn't. Then again, the last time we checked, the history on the biggest monetary experiment in history - one in which both the Fed and the BOJ are now openly monetizing 70% of gross bond issuance - has certainly not been written. Finally, in the off chance Summers is indeed correct, what history will instead ask is why instead of monetizing all the debt from day 1 of the Fed's inception in 1913, and thus pushing the stock market into scientific notation territory, did the Fed leave so many trillions of "wealth effect" on the table?

Full Bloomberg TV interview below:

Summers on whether quantitative easing has worked:

"I don't think there's any question that the Fed's efforts to provide liquidity to the markets made a huge difference in getting us out of this crisis and preventing what could have been a depression scenario. I don't think there's much doubt, looking at the slow growth of output that we have had, the failure to achieve escape velocity, the fact that inflation is still trending down, that the right bias of policies towards accelerated rather than towards the break. Are the problematic aspects of QE? Of course. Are the reasons why it cannot be maintained forever? Of course. But if you had to say, should we have used this tool or should we not have, I think the answer is overwhelming that we should have. I think it does bear emphasis that the people who were most appalled by it are the people who have been predicting hyperinflation around the corner for four years now and they have been wrong at every turn. You can debate different views. I am not going to try to make a precise judgment as to just when tapering ought to take place. But on the question of whether the Fed stepping up and providing liquidity when no one else would was the right thing to do, I think historians will judge that about 98 to 2."

On whether Washington understands that QE has benefited the financial industry:

"I'm a Democrat. My primary concern is not with the Street. It is with the incomes of the middle class. But sometimes doing the right thing has had some beneficiaries. That is not the motivation for doing QE. I think the primary consequence of QE is that we have avoided the bottom falling out of the economy in the way that it did when they did not do QE in 1930 and 1931 and made the depression great. As a consequence of saving the economy, has it been better for Wall Street? Yes, it has been. Is that a reason not to save the economy? I surely don't think so. Would it be better if we were growing the economy in other ways? Should we be investing in fixing Kennedy airport which is in shambles at a time when we can borrow money cheap, at a time when construction unemployment is in double digits? Of course. Should we be doing something about 25,000 schools across the country where the paint is chipping off the walls? Of course. Should we be allowing a situation where the brightest young scientists who can't get research funding until they are 40? Of course we shouldn't be. Quantitative easing is not the best tool for growing the economy, but to say that because it has been a good time for Wall Street we need to put the brake on instead, would be to do grave damage to our economic future and I don't think that is the right way to frame the question at all."

On how he would tackle wealth disparity:

"I would be growing the economy. I would be starting to grow the economy by putting many more people to work, doing the things that build the economy. We have deferred more maintenance in the last five years than any time in the country's history. We will pay for that. The next generation is going to pay for that. It is going to mean larger budget deficits in the future. Why isn't this the time when we have so much unemployment, such cheap building materials, and the ability to borrow money and next to nothing -- why isn't this the time to be doing something about that? And that would mean a large number of middle-class jobs. We have pursued policies that have led to a lot more investment in derivatives and a lot less investment in fixing potholes than we should make as a country. Those policies are not defense policies. Those policies are the abdication of the responsibility to invest in the future that has been the consequence of our fiscal policies. A bunch of it is the public sector. The potholes, the failure to fix the airports, the fact that we still have an air traffic control system that relies on vacuum tubes like an old black and white TV -- that is a large part of it. But it is also the case that we have a regulatory framework where it takes forever to cite anything and to get anything done. When you drive in from the airport in London or Beijing, you can talk on your cell phone and it does not get interrupted. That is not true when you drive in from LaGuardia or Kennedy airport as you well know. That is not the public-sector's fault except in so far that it is the fault of a range of regulations that create great uncertainty."

On whether he believes we need bubbles:

"I don't believe in bubbles. Obviously almost when you say something it's a bubble, you are saying it is not that great. What I did say and what I believe very profoundly is that it has been a long time since we have had rapid, healthy growth in this country. When we had growth prior to the financial crisis it was growth that was reliant on bubbles. We have a framework that may well not produce growth in the absence of bubbles. That is not an argument for bubbles. That is an argument for changing the framework. When I spoke at the IMF about the risks of what economists call secular stagnation, what I was calling for was not a resumption of bubbles, I was calling for a framework that would make bubble free growth possible."

On whether he sees any bubbles right now:

"I think that under confidence is a much larger risk than overconfidence in the American economy today. Do I see certain developments, do I hear the word covenant-lite more frequently than i would like to? Yes I do. Are there spreads that look at little tight? Yes, there are. But in the fullness of it, I think the risks we are having too little confidence, too little lending, and too little spending our much greater than the risks of the reverse. Responding wisely and effectively to financial crisis requires -- it is a very difficult thing for people to appreciate and people to recognize. This goes to almost every financial error. Almost every financial error takes the form of doing today what you wish you would have done yesterday. That is what bubbles are about. People see a stock go up and they wish they had bought it yesterday so they buy it today. And it goes up more and there's a bigger bubble. Similarly with respect to panics. What caused this crisis is that there was overconfidence and complacency, excessive borrowing and lending, and unsustainable spending. That is what caused this crisis. But now, after the crisis, the only way we will get the economy back to normal is if we have more confidence, more borrowing and lending and more spending. It is that human tendency to do today what you wish you had done yesterday that can often lead us in the wrong direction. That is why i keep stressing the importance and emphasizing the accelerator rather than the brake, the importance of public and private spending, the importance of maintaining the flow of credit. Those are the things that need to be our priorities."

On whether Washington is to blame:

"I think there are clearly excesses and I think that in particular in financial regulation, as with health care, policy has run ahead of execution. There are aspects of the execution that create great uncertainty. People cannot know what they will be prosecutors for. People make agreements and they cannot rely on those agreements completely holding. I think that is problematic. On the other hand, I don't think there's any question that our financial institutions need to hold much more capital than they were before this crisis and that was the right step. I don't think there is any question that if we are going to avoid the panics and runs that we saw him that there needs to be tighter liquidity requirements. I think the broad thrusts of the change in financial policy are appropriate, but I think there are real things that need to be done."

On whether corporate America would be investing more if there was less gridlock and political uncertainty:

"I'm sure they would be. I'm sure they would be investing if there was more rapidly functioning and more predictable regulatory frameworks around everything from citing to the choice of fuels to the nature of reporting to the rules of immigrants. I am someone who has been for public investment. I have also been someone who has said that confidence is the cheapest form of stimulus. That is a very important principle for government to remember going forward and we need to pay more attention going forward to increase business confidence."

On whether austerity measures in the UK worked:

"I don't think the right reading of the British situation would emphasize austerity. I think the British economy is not as strong as the way you just spoke would suggest. I think insofar as it is, it goes to easy monetary policy and it goes to the consequences of a much weaker pound. It goes to a number of structural reforms. I don't think you'll find many economists taking the position. I don't think you'll find many objective observers making the case that it was the austerity that was responsible for anything that's positive that's happening in Britain."

On whether Washington is open to proposals from Wall Street regarding Fannie Mae and Freddie Mac:

"I think Washington should be and I suspect is open to advice from any quarter. I think the idea that somehow the right thing to do is to privatize these institutions to a coalition of hedge funds who have bought up the stock at a very low price and expect to earn an inordinate return. The idea that that is the right thing for public policy strikes me as being at the edge of ludicrous. It is not something that I would remotely support. It is not an argument against listening. There's a big difference between listening and taking extraordinarily self-serving advice. I think one would have to recognize that how could it be otherwise that those who purchase large amounts of the securities that make proposals that would raise further the value of the securities, that their advice is anything but disinterested or detached."

On why he pulled himself out of the running for Federal Reserve Chairman:

"Given the context and the controversy, I thought it was the right thing for the Federal Reserve for me to withdraw. I thought it was the right thing for the national economy. I don't think that either would have been well served by the controversy that would have continued had I remained a candidate."

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Charles Nelson Reilly's picture

what a fucking asshole!

nope-1004's picture

Brooksley Borne owns Larry Summers.  Larry Summers is never wrong, never wrong, and never wrong.  He lost millions for Harvard, yet is never wrong.

Hate the guy.


idea_hamster's picture

"History Will Overwhelmingly Approve QE"

 Of course it will – history is written by the winners.  The 99% and fixed-income folks will all be ground into Soylent Green and fed to Blythe’s shitzu in her old age.


Pladizow's picture

"History Will Overwhelmingly Approve QE" - Larry Sommers

“History is a set of lies agreed upon.”  - Napoleon Bonaparte

dracos_ghost's picture

Let's not forget the irony that this was spoken at the ROBIN HOOD INVESTORS Conference.

Oh, Larry forgot to tell everyone that he meant his pet schnauzer "History" was the one who will overwhelmingly approve.

nope-1004's picture

Hey everyone. Larry Summers said he'd be growing the economy if he were in charge.  Yet, when given the opportunity to be Fed Chief, he folds.

HAHAHA.  What a flake.  Larry Summers, you're a fucking loser.


jcaz's picture

History will show that Larry Summers is the most over-rated piece of dung to ever even have a whiff as Fed Chief-  sad that so many still this clueless tard any semblence of credibility, but there ya go....

Pinto Currency's picture


What Larry means is that the shareholder banks of the Federal Reserve, for whom Larry consults, will overwhelmingly approve that they implemented QE.


Larry 'Gibson's Paradox' Summers is in a bit of a bind as his gold rig is being exposed as the central part of a multi-decade debt / financial market bubble that he engineered with Bob Rubin.



Sudden Debt's picture

I'M GI JOE AND I OVERWHELMINGLY APROVE OF... what was it again?... EQ!!!

say what?




G... I.... JOOOEEEEEE!!! I RULE!!!

Ignatius's picture

"History will be kind to us, gentlemen, because I will write it." -- Winston Churchill

johnQpublic's picture

ever read churchills tome?

i started reading it in fourth grade(truth, swear to friends at all)

CPL's picture

Sommers is such a weasel.

Apostate2's picture

'History is philosophy teaching by examples.'


Flakmeister's picture

Yeah, the Greeks figured shit out...

fooshorter's picture

Beat me to it! Bravo! Victors write the history books. So history will overwhelmingly approve QE. 

Never mistake that we actually need a Federal Reserve. This quasi public parasite is a bastard child. Pushed into law while 90% of law makers were away.


They create money out of nothing. If you or I did that it would be a felony. They take their made up money and create REAL debt money by buying Treasures bonds.

They feed the cronyism machine, they dilute our buying power that you and I break our backs over everday day. 


The Fed is a quasi private entity, we are literally get taxed without represenation, not withstanding that the two party system is a total farce.

The american people are brainwashed everyday into thinking that they will be the lucky 5% that actually enjoys a good living when most have no change at it. 


Its fuck this friday. Every friday things get worse, if you have been following my posts you know I have been on this for months now...



fooshorter's picture


We determine our quaility of life by how much money we get in paycheck. Would you agree to the following?:

- You get told you make a certain amount, but then you get paid SIGNIFICANTLY LESS.

-Since 1913 the governement decieded that the money YOU worked your ass for to feed YOUR family is now some how theirs! The government spends its money worse then a cronic debt additic.

-Would you give 20 to 30% of your money to a debt addict that then: spies on you every living moment, actively destroyes your basic rights, gets you into fights you have no interest in, delibaretly lies to you, takes your skills set to make money and helps out your neighbor to have an unfair advantage, goes around the neighborhood giving tribute to different gangs so they buy guns and drugs? Well in so many words thats what our government does. 

-Did you agree to get paid in a currency which after a big chunk is taking out to feed the deb addict can buy less items everday, while prices also go up. You might getter better at your skill set , but you are rewarded with less purchasing power everyday, that YOU have no direct control over.

- The more money you make the more they take out. However the 1 guy in our town of 99 that makes all the money somehow pays a much lower % then you do.

-Why do humans continue to support a system that clearly destroys their lives, provides no way out, and worse yet, is becoming more aggressive in its destruction.

-Think of how the ACA is now a new addict runinng around the town that asks more % while giving less benefits then what was previously offered. All the while making it tremedously more difficult for people who are geniully trying to escape the wage slave system to escape.




You and I are DETERMINED by these people to continue working everyday, get denied the things we like to have or experience, or the freedom to do what we want, with less means everyday to achieve these goals, while they don't* even play the fucking game!!

Why do humans allow a 1000 criminals to control millions of people. Why did the slaves never rebel? Why does the collective believe it is so powerless?  



new game's picture

foos - excellent contribution + 10.

to answer your question I think it comes down to that sacrificial lamb situtation.

so who is going to stand (figurativly) in timmamen(sp) square and shoot the 30.06

against the armor plate whilst the fucken thing runs him or her over. the media would use to

reinforce upon the rest of the sheeple, what a waste of life that was.

But, upon enough shit a happening, there is 

a spark that ignites spontaneous combustion of anger, and the sheeple come out of

slow boil. ACA could be the pre ignition.

violence is the only solution at this point...


hedgeless_horseman's picture



Harry Truman: "History Will Overwhelmingly Approve of the Nuclear Attacks on Japan."

Hiroshima and Nagasaki Victims Remain Silent On The Matter.

Sudden Debt's picture


fooshorter's picture

I want you to look at that picture and think what if those people were your family, friends, or the love of your life? What point does that prove? What justice was done? 

It took a few men and a one bomb to deliever destruction far beyond their own comprehension and understanding, all while thinking they were doing the "right" thing.



Larry Summers thinks he is doing the "right" thing.

TBT or not TBT's picture

Okinawa times a thousand would have been far worse for both victor and vanquished. Try to grow some humanity. The two bombs were a a great humanitarian gesture, in easily quantified terms.

hedgeless_horseman's picture



Okinawa times a thousand would have been far worse for both victor and vanquished.

Enjoy that false dichotomy.  Try this one, too.

Allowing the banks to fail times a thousand would have been far worse for both victor and vanquished.

tradewithdave's picture

There's "systemically important" and there's not systemically important. It's got to be in the Constitution somewhere. All systemically important men are created unequal while all others... "Far worse."

fooshorter's picture

I find irony in your statement, though I agree with your first point. You asked me to grow humanity while simulatenoulsy justifing the killing of mass amount of people.

In fact because people are the "others" that you don't know or care about its perfectly fine to destroy their lives. I wonder if the roles were reversed and it was two 'merican cities that got it, would you say the same thing? What if you surivived but your family was burned to death, you witness the whole thing and were sick for years praying for death so you could see your family again? Then had a japanese man come up to you and say "yea think of the soliders we saved on both sides!, its easily quantifiable!" 

I know what you meant by "in quantified terms", but I am the belief that no life is quantifiable in anyway.



Warhead's picture

Sure, because "if it saves one child's life..." Right?

fooshorter's picture

It never matters, until its your child.

TheMuppet's picture

Japan capitulated not because of the bomb - every Japanese city except those on the atomic bomb "short list" had been napalm-torched, two more were not going to change the Tokyo regime's mind -  but because the USSR invaded Manchuria, destroying the position of the Japanese Army on the mainland.   The Army were the last holdouts against surrender in the government, but they lost their leverage with Manchuria. 

The atom bombs was nothing but a US science experiment.

new game's picture

larry, is that you down voting?

A Nanny Moose's picture

Pavement on the road to hell.

Groundhog Day's picture

Your a genius HH,

Do you have access to their playbook? Do they huddle together and and say ok now it's time to say this

venturen's picture

Would you rather this was a picture of dead Americans? How about those killed at the hands of the brutal POW camps? We were told that Nagasaki and Hiroshima would be unlivable for  a thousand years, but alas they are thriving cities. What was your point....we had to kill some japanese to win the war before they killed us? Sorry no sympathy for the japanese they were vicious and brutal....go read Unbroken!

Kirk2NCC1701's picture

LS is never wrong? Shit, that reminds me of my wife.

Auric Goldfinger's picture

You're married to Larry Summers?!?

Man, I'm sure sorry.

Groundhog Day's picture

As far as i know LARRY, History overwhelmingly tells us that YOU, ROB RUBIN, CLINTON and some others i can't think of you right now in my anger undid GLASS- STEGAL creating the fucking shit show we are in  causing the need for QE INFINTY. But our children will never learn that in the history books, only from informed parents like myself......ASSHOLE

I am more equal than others's picture




"History Will Overwhelmingly Approve QE"

History is what is reported by the victor. The people - he 99.9% - are the losers right now.  That will change.  Your corpse will be cut down from the lamp post on one day in the future.

Canadian Dirtlump's picture

that fucking asshole, Mr. Reilly, will soon have an accompanying fat bastardesque neck vagina by the looks of it.. LOL

ejmoosa's picture

I' m sure Hitler said the same thing about his activities.

vmromk's picture

Another scumbag who needs the firing squad.

Kirk2NCC1701's picture

Bullets are expensive. Poor ROI, poor EROEI.

He might be of more use on a gator farm.

ejmoosa's picture

Rope is also reuseable....

Kirk2NCC1701's picture

True, but I'm partial to a new set of gator boots and wallet. The irony, the irony. ;-)

pods's picture

All you gotta do is take off Jabba's lap band and he will kill himself in no time.


ejmoosa's picture

Suddenly I am seeing the Reflecting Pool located conveniently between Congress and the Lincoln Memorial, filled with Gators.  


We can start those that are ruining this nation at one end of the reflecting pool, and if they make it to the other end, they are free.

And if they don't, well it's a win win for us and the gators.

I think this could work.

new game's picture

long gators, bets and leveraged...

unlimited margin!


viahj's picture

Government Gator Games...we could sell tickets!

Apostate2's picture

Obama's immigration speech, El Paso (2011) on what the opposition wants re border control:

'Maybe they’ll say we need a moat. Or alligators in the moat.'

Running On Bingo Fuel's picture

What if Mr. Summers is correct and the Zero's are, well.. Zero's?


Duc888's picture

Well now Larry, that would depend on if you're on the receiving end of the bezzle or if you have to pay for it, wouldn't it?

Flakmeister's picture

Until it doesn't....

Edit: Clearly this went over the head of at least two people. It was by no means a supportive statement...