A Janet Yellen-Induced Crash?
Many economic analysts are talking about an inevitable
crash. They have even posed the question: “Does anybody believe that
Federal Reserve Chair Janet Yellen can pull off the miracle of draining
trillions of dollars from the financial system without causing a major
meltdown in the markets—possibly even a recession?”
It
confuses me that anyone could have issues with the Federal Reserve
slowly moving some of the debt off their balance sheets, especially when
these are the same people who complain, whine, moan and write books
about doom and gloom because China holds more than $1.2 trillion of our
debt.
Yet the largest creditor—the Federal
Reserve—holding $4.5 trillion of debt is somehow a good thing. Of
course, they are not concerned about Uncle Sam being at the mercy of the
Federal Reserve like we might be with China. Obviously, the Federal
Reserve would never hold this balance sheet over the heads of
legislators in Congress, to which they are supposed to be held
accountable.
Addressing Debt Issue
I
have never been, and can’t imagine that I ever will be, much of a fan
of the Federal Reserve. Its policies, predictions and projections of
where the economy might have been and where it might be going are seldom
right.
Furthermore, the Federal Reserve, as well as all
the cronies in and around the Federal Reserve chairperson, can’t ever
seem to get on the same page. It’s like watching the Republican party on
Capitol Hill. But having said all that, I find it hard to believe that
anyone would embrace the Fed holding $4.5 trillion worth of U.S. debt.
Our analytics will be more accurate if we stop
relying on the punch bowl and stop allowing the Fed’s false positives to
influence our outlook any longer than they already have.
We
would be better served by addressing the serious problem of America’s
debt. Part of this picture is the Treasury Department’s insatiable
appetite to continue to print money as they issue debt in order to
monetize that which has already been printed. After all, they need to
pay the bills somehow as we continue to spend more than we have.
The
Federal Reserve’s problem is that Congress has neglected its duty to
direct fiscal policies that haven’t come out of Washington for 30 years.
Maybe Congress needs to address the size of our government, the size of
our debt and understand the urgency of the problem.
Congress
should also address the inability and lack of desire of most in
Washington, D.C., to reduce the size of government and be accountable
for government spending. Why won’t anyone address the possibility that
special interest spending alone could be dramatically reduced?
Blocking Tax Reform
While
I believe that President Trump’s pro-growth policies are good, I also
believe that that he will likely not have any support from the party he
is supposed to represent. We can’t have true, beneficial tax reform when
we have thousands of people making millions of dollars from the
complexities of the current tax code.
We also know that we can’t expect our
legislators to be concerned with the will of the people and what is good
for the country. This would mean robbing some very important dollars
from the campaign war chests.
As I listen to press
conferences from the likes of the so-called leadership—House Speaker
Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Minority
Leader Chuck Schumer and others—all I hear are campaign speeches playing
to their base. Unlike Schumer, Ryan and McConnell are deceiving
themselves about the desires of their constituents. These two say what
they think needs to be said, while trying to sound as articulate as
possible, in the hopes of garnering votes for their reelection.
Acting for the People
These
aren’t words, ideas, thoughts and opinions based on convictions of what
is best for the American people, the economy and national interest.
Politicians can talk all they want about the debt that America has and
how it needs to be fixed. But they must also question the necessity of
the $4.5 trillion debt held by this private entity group called the
Federal Reserve, and that is what needs to be fixed.
In questioning Janet Yellen, our legislators must ask
why we should be concerned about being held hostage by China, Japan and
other nations—and not feel the same about the Fed. Could it be the
legislators know that if they were to firmly cut our spending, thereby
cutting the deficit and not having the need for the Fed to continue to
carry our debt, they would not be as free to appease lobbyists and
special interest groups and prepare for their next election?
It’s
ironic that China holding $1.2 trillion of our debt seems to be bad for
America and America’s economy, while few are concerned about the Fed
holding $4.5 trillion. The Federal Reserve’s U.S debt holding is the
cause of 10 years of dysfunction on Capitol Hill, and no end is in
sight.
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