At Tuesday’s Senate confirmation hearing, former Fed chair and President Biden’s pick as US Treasury secretary Janet Yellen claimed to have an appreciation for the nation’s debt burden, then proceeded to show she clearly doesn’t:
‘But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs…‘
This imprecise term, “act big,” is apparently being used to describe economic ideas, mainly how the government plans to spend $1.9 trillion. It’s a statement devoid of any calculation, open to an infinite number of interpretations. When she says the benefits outweigh the costs, this claim cannot be substantiated. Unfortunately, we live in an era where few question the expertise of the “economic experts.” As Treasury secretary, Yellen will be in a tremendous position of power, making decisions on our behalf. It’s in our best interest to consider the rationale behind such “big” ideas.
Yellen expressed some of her rationale for supporting the proposed spending bill:
‘I think there is a consensus now: without further action, we risk a longer, more painful recession now—and long-term scarring of the economy later.‘
Who are these economists? Where is this consensus? This was not the first time in the past week that “economists” were cited as supporting inflationist policies. In last Thursday’s speech, where the $1.9 trillion spending plan was initially unveiled, Biden referred to “economists” five times!
Like Yellen, the appeal to a higher economic power is strong. The first of his references mirrored hers:
‘We have to act and we have to act now. This is what economists are telling us….Our growing chorus of top economists agree that in this moment of crisis, with interest rates at historic lows, we can not afford inaction.‘
These economists are apparently in favor of borrowing trillions of dollars to fight against the pandemic, forced shutdowns, and a recession. The newly appointed president of the United States of America attempts to make the case for more debt compelling by telling us:
‘A growing number of top economists have shown, even our debt situation will be more stable, not less stable if we seize this moment with vision and purpose.‘
In what sounds like Fedspeak, supposedly taking on debt today will make our debt situation “more stable” in the future.
Finally, near the end of Biden’s speech, we are given an inkling as to who these economists could be who advocate spending trillions of dollars. He acknowledges it “does not come cheaply,” however, he urges that failure to act would be a much worse fate. After all:
‘The consensus among leading economists is we simply can not afford not to do what I’m proposing. Independent, respected institutions from around the world, from the Federal Reserve to the International Monetary Fund have underscored the urgency. Even Wall Street firms have reinforced the logic.‘
The “economists” providing this information remain unknown. Nevertheless, the Federal Reserve, the International Money Fund, and Wall Street firms are said to be on board with the Biden/Yellen spending plan. Perhaps with good reason, as they tend to benefit handsomely from government stimulus bills, which are paid for by society. As for those who don’t fall into those categories, that remains to be seen, since the threat of currency collapse and national bankruptcy continues to fall outside the purview of the Fed and the world’s leading economists.
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