Current and former Treasury Secretaries Janet Yellen and Lawrence Summers have been engaging in Internet flame war. It’s odd and cringe-worthy, like watching a rap battle break out between Romneys.

Summers started it. Waving salamandrine arms in alarm, the ex-Harvard president went on a media tour to insist that the Joe Biden/Yellen pandemic relief proposal would end in inflationary disaster. He wrote in the Washington Posta few weeks back:

There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation…

Yellen went on her own morning talk show tour in response, insisting that there’s no risk that we’re anywhere near what Summers described as the best-case scenario, an “overheated economy in which employers are desperate to find workers and push up wages and benefits.” In fact, she said: “We’re in a deep hole with respect to the job market,” adding that minus a robust recovery plan, full employment would not return until 2025:

Until now, the Covid-19 relief programs most resembled the bailout policies of George Bush and Barack Obama in 2008-2009, which stressed recapitalization of the financial sector. The CARES Act initially appeared as more of the same: a Fed-fueled Wall Street romp pitched as a trickle-down rescue, that didn’t do much trickling down.

The result of such policies is sometimes euphemistically described as a “K-Shaped Recovery” (see TK Finance Dictionary, above). In this “recovery,” the happy upward prong of the letter K represents banks, real estate, the telecom sector, as well as anyone who owns any kind of financial asset, from a home to a stock portfolio. The down-pointing prong usually represents wages or the “real” economy, which humorously has often had to be described in press treatments in clinical terms, as a separate, alien thing.

In fact, the “K” is just camouflaging jargon for a faux recovery, in which massive upward gains for a few, that in the aggregate offset greater losses for everyone else, are pitched as a net positive for society overall. Joe Biden mocked this concept as a candidate. Is he serious about abandoning it as president?

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TK News by Matt Taibbi

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