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CNBC Excerpts: Former U.S. Treasury Secretary Larry Summers Speaks With CNBC’s “Squawk Box” Today

WHEN: Today, Tuesday, August 25th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC interview with former U.S. Treasury Secretary Larry Summers on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000410899 and http://video.cnbc.com/gallery/?video=3000410900.

All references must be sourced to CNBC.

SUMMERS ON A CRISIS

I'm not prepared to predict that we're in the midst of a crisis, but certainly the risks feel greater now than they have at moments in the past. And I think the orientation of policy which had been towards resisting overconfidence, now has to again shift towards providing confidence.

SUMMERS ON INVESTMENT

It would have been much better if through some combination of measures to promote investment, either private investment, through tax and regulatory policies, or public investment, through infrastructure investment – it would have been much better if we had an adequate growth impetus and had not had to rely on such low interest rates. That would have been the safer path from the point of view of financial stability.

SUMMERS ON RATES

I understand the financial stability case for an increase in rates and it would have been possible if there had been more demand coming from something else. But today with the VIX at 40, it seems to me you have a quite different argument. Today, the only argument you really have is, well it's uncomfortable to be at zero."

SUMMERS ON HIS FEAR

My fear is that the new reality in an economy where the labor force isn't growing very fast, where productivity growth is slower, where capital goods are much cheaper, where the nature of production has shifted – is that you may need those kinds of low interest rates to be able to maintain a reasonable level of growth and that's why I come back to doing other things to be the accelerant for the economy.

SUMMERS ON INFLATION

I see expected inflation even out over a five to ten year horizon as being well below 2% as the market reads it. I look at the CPI and I see more than half the components actually in deflation territory over the last six months. So I see the risks of sub 2% inflation as much greater than the risks of above 2% inflation.

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