the staff of the Ridgewood blog
Ridgewood NJ, according to Quantitative Easing Janet Yellen ,and her media supporters , the sky is falling and there’s one month left for Republicans to relent on their refusal to raise the debt limit (so the US can pay its existing bills) unless the White House meets their demands (future cuts that will likely slash climate, education and social funding). Now, it turns out there may only be seven days left. President Joe Biden invited top congressional leaders for a meeting on the matter, but fear in markets has been rising for some time now, with yields on Treasury bills for early June soaring. Democrats are already looking at some radical options to keep the world’s largest economy from defaulting.
Madam Secretary, just to recap: the House already DID vote to raise the debt ceiling late last week. Were you abroad at a climate change conference? The chamber that hasn’t raised the debt ceiling is the United States SENATE. Last time we checked, that body is ruled by Democrat Chuck Schumer.
Biden’s media team warns that failing to raise the debt ceiling will cause a deterioration of America’s credit rating and raise the cost of federal borrowing. Possibly. But does the Biden Administration really want to run with this argument? When Biden came into office, the federal fund’s interest rate was close to zero and the cost of federal borrowing was seldom in modern times lower.
Today, the federal funds rate is 5% and soon to be 5.25%. (Remember: The Fed raised these rates to fend off the inflation that was incited by Biden’s $6 trillion spending and borrowing spree.)
Interest payments are now expected to be more than $2 trillion higher over the next decade since Biden came into office and opened the spending trough.
Stanley Druckenmiller, the hedge fund investor and long-time deficit hawk, said the current crisis of choice is dwarfed by the dangers of unchecked future government spending. “The fiscal recklessness of the last decade has been like watching a horror movie unfold,” he said.
Pushing on a string, Yellen spearheaded Quantitative easing (QE) a type of unconventional monetary policy in which a nation’s central bank, such as the Federal Reserve, attempts to boost the economy by purchasing a large number of long-term securities in the open market in order to increase the money supply and encourage lending and investment.
Critics called it right countering that a prolonged QE can cause dramatic inflation without growth, leading to a condition known as stagflation. While some economic observers still predict a soft landing as others double down on year-old recession bets, there’s a growing contingent who worry the US economy is headed for a stall. This week’s mixed bag of data—tepid growth, sticky inflation, better-than-expected tech earnings, a strong labor market, and most importantly high consumer spending—has renewed chatter of stagflation. That’s the dynamic in which inflation remains elevated but growth is anemic, and it’s an ugly state of affairs.
Take a Wall Street Tour https://www.facebook.com/
https://thehill.com/homenews/house/3983718-house-democrats-reveal-secret-plan-to-force-vote-on-debt-limit-hike/
Yesterday on the news, I saw that Dems want the IRS to do your tax returns. They’re so smart!