Larry Summers: belief

Transcript context

…If the Trump administration pulls us from NAFTA or the Korean Free Trade Agreement, or both, how great do you see the risk of another depression? Neither the extra trade caused by Korea or NAFTA is large enough, relative to our $17 trillion economy, to mean that those direct impacts would cause a depression. What the psychological effect of that would be on either of those actions on the global trading system, I think that’s harder to say. I cannot imagine a crazier strategy at this instant, with what is going on on the Korean peninsula, than for us to say to Korea, “We don’t have your back. We’re fussing around about our trade deficit right now.” I cannot imagine a strategy better calculated to foster doubt, uncertainty, among people who have, heretofore, been our allies. So I think it would be a grave error. But economists make a mistake — most recently in the Brexit debate — when they’re quick to say that anything they think constitutes a mistake will cause a depression, and I wouldn’t go that far with respect to this. I’m a Washington correspondent of the Japanese opinion magazine The Liberty. I remember clearly your being against the consumption tax hike by Prime Minister Abe. Your warning has been proved right. And you gave a grade of ‘incomplete’ to Abenomics. Prime Minister Abe declared a couple of weeks ago he would raise the consumption tax again from 8 to 10 percent. What do you think will happen after the consumption tax hike?…

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