Former Treasury Secretary Larry Summers told Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference today that the Federal Reserve’s quantitative easing program was the right call for the economy. Summers said, “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 are going to judge that about 98 to 2.”

Larry Summers

Summers also said that the economy lately hasn’t shown an ability to grow without bubbles, saying, “It has been a long time since we have had rapid, healthy growth in the country…That is not an argument for bubbles. That is an argument for changing the framework.”

Summers Says History Will Favor Fed’s QE `98 to 2′

Larry 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.”

Larry Summers 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.”

Larry Summers 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.”

Larry Summers 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.”

Larry Summers 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

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