Summers: Another Trump term would bring ‘inflationary spiral,’ big deficits

Former Treasury Secretary Larry Summers warned Wednesday that a second Trump administration could destroy the U.S. economy, predicting an “inflationary spiral.”

“I don’t think it would just be massive deregulation,” Summers said at a Semafor event Wednesday. “I think it would be massive regulation in the form of restrictions on the ability to buy products from abroad, which would raise prices and would set off an inflationary spiral.”

Summers explained that Trump’s populist economic policy could also infringe on the Federal Reserve’s independence, risking higher inflation and leading to high spending.

“Look, there’s a model for populism. It’s the way that the way most countries in Latin America have been run most of the time since the Second World War,” he said. “And to put it mildly, it hasn’t been conspicuously economically successful.”

He warned Trump’s policies could lead to hyperinflation, comparing the situation to 1950s Argentina — an economic collapse that led to social unrest.

“I’ve now been doing this as a kind of an involved adult through about a dozen presidential elections, and I’ve always wanted one side to win,” he said. “But until this time, I’ve never thought it was a huge deal for the next generation with one side.” 

“And I really do think it is. I think Argentina is the right analogy,” he continued. “With one critical difference. World Order never hinged on Argentina. The world order does hinge on the United States of America.”

Summers, an economist who worked in the Clinton and Obama administrations, has repeatedly urged voters to oppose Trump. In January, he warned that the November election is likely the “most consequential” since World War II.

The Hill has reached out to the Trump campaign for a response to Summers.