Larry Summers: How the Fed screwed up; What a Trump win would do to the economy | E1024

If you want to get out of the dollar, you have to get into some other currency. And there's a lot that's problematic about, uh, other currencies. It's a joke, but not without some element of truth, to say that Europe's a museum, Japan's a nursing home, China is a jail, and Bitcoin's an experiment. So I think the dollar has a lot of the kind of advantages that the English language has. It's right now kind of where everybody else is, and so that makes it where everybody wants to be.

Larry, I am so excited for this. Thank you so much for joining me, first off.

Glad to be with you.

Now, I would love to start, I think parents shape us in the most unique and wonderful ways. Your parents, your mother's an economist, father an economist. How did your parents shape you, do you think, Larry?

I think I came to believe in thinking analytically and thinking rationally about social phenomena. And so from a young age, I was used to asking economists-like questions. Uh, "What about getting one more of those?" Marginal, uh, marginal analysis. "How do costs compare with, uh, benefits?" And so thinking analytically about, uh, why houses were built the way they were, all those kinds of questions were parts of, uh, my childhood.

I have to ask. We, we just mentioned, you know, your being a father and your son. Did that impact how you brought up your son? And being a father yourself, in terms of the conversations you have around the dinner table?

Yeah, it was a part of, uh, my kids', uh, upbringing. Sometimes it worked better, sometimes it worked, uh, worse. When my daughter Ruthie was four or five, I, um, needed to get a taxi, and a taxi didn't come to my house when I wanted it. And I said, "Damn it, that's what you get with a monopoly cab company." And Ruthie said, "What's a monopoly, Daddy?" And I said, "Well, it's when there's no competition." And she didn't understand, and so I wanted to explain it to her. So I said, "Ruthie, what would you do if you went to a toy store and they didn't have the toy you wanted and they were really mean to you?" And I was hoping for the answer, "Well, I'd go to a different toy store," so I could explain to her about competition. But in fact she said, "Well, then I'd steal their toys."

(laughs)

And, um, maybe Ruthie learned something out of that whole conversation, but I sort of learned something about how people react to market mechanisms.

You learned that there's no such thing as a, a lack of creativity in children. (laughs)

Something like that. I learned something about how people react when the market makes them unhappy.

I love that. Um, listen, I'm a big believer in Charlie Munger's statement, which is obviously, "Show me the incentive and I'll show you the outcome." You, you've had many a discussion, I've listened to many on recent runs on inflation, and I really wanted to start, honestly, Larry, with the question of, do you believe that inflation targeting is fit for purpose as the main focus of central bank policy today?