Financial Disaster and The Fed Chair

From Peter Dickmeyer:

“According to Kotlikoff, a long-time activist for fiscal rectitude, the problem stems in large part from the fact that the US government has been spending almost all of Americans’ approximately $795 billion in social security payroll taxes to pay current bills, rather than investing them to fund retirees’ benefits.

The upshot is that on a net basis, the US government has no money to pay all the benefits that have been promised. Politicians know that defaults will occur, they just haven’t figured out how to finesse this.

However even in the best of cases, Kotlikoff is correct on one crucial point: America is unable to meet its obligations as they become due. That is the definition of bankruptcy.

In a sense, it should hardly come as a surprise that politicians are hiding this fact.”

But politicians are only partially to blame for financial disasters.  The Fed also played a role. It is time to reappoint Chairman Yellen or find a new Chairman for the ongoing disaster known as The Federal Reserve.

 

From Clint Siegner, Money Metals Exchange  [edited]

“Candidate Donald Trump was none too kind to current Federal Reserve Chair Janet Yellen during his 2016 campaign. However, the President’s tone with regards to Yellen and Fed policy has been softening since his election.

Trump met one on one with Yellen and other top contenders last week and now appears quite open to the idea of reappointing her to another four-year term.

Trump now favors Yellen’s low interest rate policy. He said in July of Yellen, “I’d like to see rates stay low. She’s historically been a low-interest-rate person.”

Like other incumbent politicians, Trump finds the allure of easy money irresistible. The president is taking credit for record stock prices. He does not want to be left holding the bag if any bubble in stocks or bonds should burst. That means keeping artificial stimulus flowing.

However, it is still hard to imagine a Fed Chair who is more bullish for precious metals. Not only does Yellen openly talk about wanting to engineer a higher inflation rate, but also, she remains a believer in QE (Quantitative Easing) and the other tools the Fed used to combat recession following the Financial Crisis. There is little doubt how she would respond to more financial turbulence during the next few years.”

Thanks to Clint Siegner, Money Metals Exchange

 

Gary Christenson

The Deviant Investor