Former Treasury Secretary Lawrence Summers said American economic policy must remain focused on addressing inadequate demand, and predicted the U.S. would avoid defaulting on its debt, as the federal government approaches its debt ceiling.
“Years after financial repair, we have made very little progress in restoring the level of GDP to its potential,” Summers said at a conference in Seoul today, according to a transcript provided by the organizers, the World Knowledge Forum. “The fraction of the population that is employed has barely increased since the trough of the recession.”
Summers, who withdrew as a candidate to lead the Federal Reserve before President Barack Obama nominated Fed Vice Chairman Janet Yellen earlier this month, said “the challenge of assuring adequate demand remains a critical one for the United States. In my view it remains essential that fiscal and monetary policy be focused on pushing the economy forward.”
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