It sounds like maybe Janet Yellen pulled a bait-and-switch to get confirmed as Fed Chairman. She seemed to be a dove (in favor of risking high inflation to help get Democrats reelected). Now that she has a guaranteed four-year term, she seems to be immediately revealing that she is more of a hawk (in favor of higher interest rates which cause the dollar to be less likely to inflate—that also makes it harder for Congress to buy votes with money “printed” by the Fed and harder for the U.S. government to pay interest on the national debt and increases the probability of a recession in an election year). . Is this good as far as lowering the risk of hyperinflation? Mildly, but we need drastic cuts in government spending. Not cuts in the rate of growth in government spending, but actually spending far less next year than this year. If Yellen pushed this approach hard enough, she could force such cuts—or get herself fired by Congress and the president changing the Federal Reserve Act of 1913. . Probably, Yellen’s nouveau fondness for a sound dollar is too little too late. We currently have a World War II debt-to-GDP ratio. We need post-World-War-II federal spending cuts—telling ten million GIs they’re fired, cutting other federal spending by 40% to head off our present dancing on the slippery slope of destroying the world’s trust in the USD. en.wikipedia.org/wiki/File:Federal_Debt_Held_by_the_Public_1790-2013.png
Posted on: Thu, 20 Mar 2014 18:27:12 +0000
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