Tag Archives: interest rates

Trump Is (Sort Of) Right About Yellen

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Donald Trump this week said that Federal Reserve Board Chairman Janet Yellen won't raise rates because President Obama told her not to. Why he's (sort of) right. [Credit: CNBC]

Don­ald Trump this week said that Fed­er­al Reserve Board Chair­man Janet Yellen won’t raise rates because Pres­i­dent Oba­ma told her not to. Why he’s (sort of) right. [Cred­it: CNBC]

The media just can’t keep up with The Donald.

Cor­po­rate news-gath­er­ing out­lets do their best to repeat and ampli­fy his every off­beat utter­ance.  His accu­sa­tion that Mar­co Rubio is a “dis­as­ter with his cred­it cards” has rip­pled through the press and forced Rubio to respond.  Dit­to for Trump’s mock­ery of Jeb’s ener­gy, Carson’s reli­gion, Carly’s face, Kasich’s poll num­bers, Hillary’s mar­i­tal rela­tions  (“If Hillary Clin­ton can’t sat­is­fy her hus­band what makes her think she can sat­is­fy Amer­i­ca?”), Bernie’s men­tal health and the men­stru­al cycles of debate moderators.

But as they were buzzing about his sched­uled appear­ance on Sat­ur­day Night Live, the media large­ly over­looked what was per­haps Trump’s most hereti­cal accu­sa­tion of all. Con­tin­ue read­ing →

Good News Coming On The Deficit. Well, Sort Of.

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Syriza party leader Alexis Tsipras hopes to prevail in today's Greek elections, which could mark a turning point in his nation's struggle against a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of.

Syriza par­ty leader Alex­is Tsipras hopes to pre­vail in today’s Greek elec­tions, which could pro­voke a show­down between Euro­pean lead­ers and Greece, which strug­gles under a crush­ing load of debt. Mean­while, U.S. gov­ern­ment deficits are improv­ing. Sort of. [Cred­it: BBC]

On Tues­day morn­ing, the Con­gres­sion­al Bud­get Office will announce that the fed­er­al deficit con­tin­ued to decline last year.

The announce­ment will trig­ger an orgy of self-con­grat­u­la­tion in Wash­ing­ton.  The Admin­is­tra­tion will claim that its poli­cies have been vin­di­cat­ed.  Repub­li­cans also will take a bow, tout­ing spend­ing con­straints they’ve imposed since win­ning the House majority.

But you’ll hear noth­ing from the Wash­ing­to­ni­ans who most deserve cred­it for reduced deficits: the Fed­er­al Reserve Board of Gov­er­nors.  By hold­ing inter­est rates near zero and lend­ing tril­lions in free mon­ey to the Trea­sury, the Fed has allowed the gov­ern­ment to reduce deficits even as it gorged on debt. Con­tin­ue read­ing →

Debt And The New American Exceptionalism

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Federal Reserve Chairman Janet Yellen plans to increase interest rates. Can government and households survive the shock? [Credit: Huffington Post]

Fed­er­al Reserve Chair­man Janet Yellen plans to increase inter­est rates. Can gov­ern­ment and house­holds sur­vive the shock? [Cred­it: Huff­in­g­ton Post]

The Amer­i­can econ­o­my is back.  After years of tepid growth and a first quar­ter con­trac­tion, GDP grew by a robust 4.6 per­cent in the third quar­ter of last year.  The unem­ploy­ment rate remained at 5.8 per­cent in Novem­ber, and ana­lysts expect the Labor Depart­ment to announce tomor­row that the econ­o­my added sub­stan­tial­ly more than 200,000 jobs in Decem­ber.  Infla­tion is low, the dol­lar is strong, oil prices have tum­bled, and fed­er­al deficits are low­er.  Near­ly six years after the reces­sion end­ed, the long-await­ed recov­ery appears at last to have arrived.

That recov­ery has in part been dri­ven by a force that could be its undo­ing: debt.  Near­ly $46 tril­lion of it, or more than 2–1/2 times our annu­al eco­nom­ic out­put. Con­tin­ue read­ing →