Larry Summers breaks new ground

We Have Secular Stagnation in the U.S. and No Bubbles Our resident expert on the stagnitisis also knows about bubbles:

“there is really no evidence of growth that is restoring equilibrium,” even 5 years after The Great Recession. There is no stock market bubble either, Summers reiterated on cable tv this morning, because the economic risk is from “under-confidence” rather than “overconfidence.” You need a major dose of “overconfidence” to get a bubble.

But QE seems ineffective, we see:

QE he views as no panacea; in fact he charges that the “policy agenda… is doing less with monetary policy than has been done before, doing less with fiscal policy than has been done before and taking steps whose basic purpose is to cause there to be less lending, borrowing and inflated asset prices than there was before.” A shocking dose of  cold reality from Summers as the stock market continues its climb to new peaks in the indexes.

So where is all that QE going? Oh yes, just sitting in the reserve accounts, the SP500 is all about 3.2% growth in an economy at zero with the stagnitisis.
But wait! That's not all, he says long term bubbles are OK

Because Summers views the 2008 crisis as not by any means over, he called this morning on Bloomberg TV for a massive government borrowing to repair infrastructure, put more people to work on reversing the “deferred maintenance that is the greatest in the country’s history.”

Long term bubble ok because the stagnitosis is a long term thing. See! No change in his theory at all, we need just make the clock go slower and all their priors fit the new norm. OK, so everyone, all at once, slow down a bit so Larry and his theory can catch up.
 
I am going to explain Larry's theory to him. Your theory is a Euler theory, it implies we can all keep march in time while maintaining our inventories. Such a theory implies that we will oscillate out of control and break apart when the stagnitisis hits zero. That is because we have accumulated stagnitisis losses in the form of debt, and we have roll over instability. Look at the SP500. The oscillations started with the 1987 crash, then we had the 2000,2008 and now look at the 2013 peak. We are oscillating, Larry, because your theory predicts roll over oscillations in the presence of stagnitisis.