Janet Yellen, the heir-apparent to Ben Bernanke as the head of the US Federal Reserve Bank, must face congressional confirmation hearings set to begin today before she can ascend to the throne room of the US economy on 01 February 2014.
I doubt that anything substantive will be learned by observing the session that begins today, except that her detractors, mostly Republicans, will grill her for answers that she will diplomatically sidestep, whilst her supporters, mostly Democrats, will be smarmy and comforting. One of the problems that I have with her is that she has not and will not clearly state her approach to quantitative easing, tapering, or economic recovery. Aside from the practicality of avoiding confrontation – remember, she needs congressional confirmation – it is almost a certainty that the Obama administration has been prepping her not to show her true colors. Opaqueness has become the reality of what the pre-presidential Obama said would be the most transparent administration in US history.
In her opening speech before the Senate Banking Committee, she said all the prerequisite things that needed to be said:
- “Today the economy is significantly stronger and continues to improve.” I have more than a few unemployed friends who would disagree with that.
- “We have farther to go to regain the ground lost in the crisis and the recession.” I’ve got to agree with that.
- “The Federal Reserve is using its monetary policy tools to promote a more robust recovery.” Whoa, Nelly! Excuse me, please, ma’am.
Quantitative easing has further diminished the value of the US dollar. But then, I guess if something is not worth the fabric it is printed on, it doesn’t matter how much of it you print. That is not recovery.
11.3 million Americans are officially listed as unemployed. That’s more than the entire population of Finland, Norway, and Bahrain
combined. The real number is much higher as, the official number counts only those that are drawing unemployment. Ms. Yellen will tell you that the unemployment rate is 7.3% as of October. That sounds much more palatable, but that is not recovery.
12.8 million American are on welfare. Add Estonia to the list in the preceding paragraph. The US government is spending in excess of $131.9 billion on welfare, not counting food stamps and unemployment. That is not recovery.
Interest rates, controlled by the Fed, are too low to encourage any kind of savings by America’s middle class. While low rates may be a boon to industrial America’s growth in the world economy, they kill blue collar savings.
Hunter Lewis observed that “The collapse of demand from savers has in turn
more than offset any new demand from borrowers lured by the low interest rates.” That is not recovery. I do have to admit that the obverse side of this coin is that those who choose to invest, do it in our arena, the stock market. Whilst the risks may appear to be greater, they are hardly scary. I have never had a year where investments did not outperform interest on savings by a wide margin.
Finally, as Fox News pointed out, ”
“President Obama in his first budget message said: “We are moving from an era of borrow and spend to one of save and invest.” His subsequent actions certainly belied his words. He has embarked on one of the greatest borrow and spend binge[s] in human history, a binge financed by the Fed. It is illegal for the Fed to buy government bonds directly with its newly created money. If it did, the government would be “borrowing” from itself. But after the bonds are sold to Wall Street, the Fed buys them back, which amounts to the same thing. Through this process, the Fed has become the largest creditor to the government, larger even than Japan or China.”
All I can say at this point is, “Look out, world. Here she comes. She’s a man eater.” Yellen is not going to save the US economy, she is going to be another Obama syncophant, the sum total of whom will likely drive the US and global economy into irreparable collapse, right onto the shoulders of our children and grandchildren, if not onto ours.
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