Today, Friday, February 2 will be the last day Janet Yellen will enter, as Federal Reserve chair, the Marriner S. Eccles Federal Reserve Board Building, located at 20th Street and Constitution Avenue, N.W., in Washington, D.C.
In many ways, Yellen got off easy during her term which started on February 3, 2014. Following up in the far after years of the 2008 Bernanke bust, price inflation was relatively mild so she could pump away and fuel the economic boom and stock market boom with little in the way of immediate harsh consequences. And pump money into the economy she did. When she started in February 2014, the money supply (M2) stood at $11.125 trillion. As she departs. money supply stands at $13.795 trillion, an increase of $2.67 trillion.
No doubt we will all pay a price in the near future for this mad printing with accelerating price inflation and an eventual stock market and economic bust. But Yellen after her Fed departure will get inflated dollar speaking gigs and overpaid consultant positions. It will more than make up for the wrecked economy and price inflation escalation that the rest of us will face that will develop because of what she did over the last four years.
And so I say, Good riddance, Janet.
It's time for a new money printer to enter from stage left. The stars are not aligned for him to have an easy time of it as you had. Your criminal money printing will be barely noticed in the history books---unless another Murray Rothbard emerges on the scene, Then, old lady, you will be exposed for what you have done and for the gonif that you are.
-RW
Under Yellen the Fed have definitely achieved their primary purpose: to enrich the members and their cronies. Good work Janet!
ReplyDeleteGood riddance to bad rubbish. End the Fed!
ReplyDeleteI expect USG spending to increase significantly under Trump (more nukes and infrastructure payola-scam). He is a NY tycoon, after all -- a big spender on someone else's dime.
ReplyDeleteIn the wake of the tax bill, proportionally less gov "revenue" will be collected through tax-theft. This means even more borrowing.
If the Fed and USG are comfortable with a low dollar policy, (who's to say what they really know/want), and the Fed target rate remains well below the natural interest rate, then bond prices should fall. Falling prices should weaken market appetite for taking on more new USG debt (for "market" read China and perhaps even the BOJ).
If this should happen then the Fed and its banking cartel will have to monetize future USG debt by creating new USD to buy government securities (leveraging fractional reserves). By no means am I suggesting monetization on a scale of hyperinflation, I'm just suggesting monetization of the debt will increase from previous levels.
Furthermore, a Fed rate that continues to be lower than the natural rate should also encourage higher corporate and personal indebtedness. Indebtedness levels really took off since the Financial Crisis.
If all this happens we can look for M2 to increase even more than the 5% average annual rise under Yellen.
Consequently, I'm expecting an inflationary boom over the next several years, like the Roaring 20s. If the USD index really tanks and consumer price inflation takes off, perhaps the trend will stop.
The only thing that will really stop the insanity is if/when interest payments on the USG debt increase to such an extent they can't be rolled up into new and larger debt, as has been the practice since LBJ. Don't know when that will happen. Japan's annual interest on the debt of its national government is already reaching 40% of the yearly budget. But the Japanese keep trucking along with no worries.
Government debt is a time bomb. At some point Cheney will be wrong and government deficits will matter again. Have no idea when it will happen; not expecting it any time soon.
For the record, I had been expecting a crackup-bust ever since 2009 so my predictive analysis is eminently fallible.