“There is a general drying up of demand for paper long term debt from major countries in Europe,” Summers said. “You see it in Japan. The dollar is fortunate in its alternatives. Europe is a museum, Japan is a nursing home, China is a prison, and Bitcoin is an experiment. But the dollar isn’t that great, and that’s why gold is on fire.”
Fed independence
Summers said when he advised Clinton and Obama on potential criticisms of the Fed, he said that it was a losing battle in both the short-term and the long-term.
“What I said to President Clinton 30 years ago was that bashing is a fool’s game,” he said. “They will not listen very much. So you will not change the short-term interest rate very much. The market will listen and push up the long-term rate.”
Amir Nurani of Left Coast Leaders said persistent media focus on rate cuts is causing buyers to wait for a “magical drop” that may never come, urging borrowers to act now as waiting could mean missing out on equity gains amid ongoing housing shortages.https://t.co/BsWEZUD52P
— Mortgage Professional America Magazine (@MPAMagazineUS) October 17, 2025
When it comes to the political pressure being put on by the current Trump administration, Summers believes there are two potential outcomes in play.
“I think all of what he’s doing is in part because he hopes maybe he’ll successfully bully them into lower rates,” Summers said. “And lower rates would be good. By my view, that’s a third of it. I think two thirds of it is laying a predicate. If the economy goes well, nobody’s going to be upset that he did this, and if the economy goes poorly, he’s got a scapegoat that’s not him and his tariffs.”