Janet Yellen worries about U.S. government debt accumulation, expects new interest rate increases, and warns of the next economic recession.

Amy Hamilton

2018-11-05 10:40:00 Mon ET

Former Fed Chair Janet Yellen worries about U.S. government debt accumulation, expects new interest rate increases, and warns of the next economic recession. Yellen points out that the current fiscal debt-and-deficit trajectory is unsustainable in the long run. The famous Sargent-Wallace unpleasant monetarist arithmetic rule suggests that if the government continues to accumulate fiscal deficits, incessant government debt issuance would induce higher inflation in the form of seigniorage taxes. Yellen also suggests that the U.S. Treasury might want to consider raising taxes with lower retirement expenditures. She observes the probable outcome that the current debt-deficit dilemma may exacerbate as more baby-boomers retire with greater retirement and health care needs.

With respect to monetary policy decisions, Yellen advocates gradual interest rate increases for better inflation containment in light of strong wage growth and labor market momentum. The current key interest rate hike helps ensure the sound-and-stable scenario that the U.S. economy cannot overheat due to cyclical tides. As of November 2018, the Federal Reserve has raised the interest rate 3 times year-to-date, and stock analysts and economists expect the FOMC to approve another key interest rate increase in December 2018. Yellen expects the next U.S. economic recession to be far off until late-2020. The next recession should be mild (but not deep and terrible).

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

PwC releases a new study of top innovators worldwide as of November 2018.

Daphne Basel

2018-11-07 08:30:00 Wednesday ET

PwC releases a new study of top innovators worldwide as of November 2018.

PwC releases a new study of top innovators worldwide as of November 2018. This study assesses the top 1,000 global companies that spend the most on R&D

+See More

President of US-China Business Council Craig Allen states that a trade deal should be within reach if Trump and Xi show courage at G20.

Daisy Harvey

2019-07-15 16:37:00 Monday ET

President of US-China Business Council Craig Allen states that a trade deal should be within reach if Trump and Xi show courage at G20.

President of US-China Business Council Craig Allen states that a trade deal should be within reach if Trump and Xi show courage at G20. A landmark trade agr

+See More

President Trump refreshes American fiscal fears and sovereign debt concerns through the One Big Beautiful Bill Act.

Jacob Miramar

2025-06-21 05:25:00 Saturday ET

President Trump refreshes American fiscal fears and sovereign debt concerns through the One Big Beautiful Bill Act.

President Trump refreshes American fiscal fears, worries, and concerns through the One Big Beautiful Bill Act. The Congressional Budget Office (CBO) estimat

+See More

Amazon and Google face more intense antitrust scrutiny.

Apple Boston

2019-06-21 13:33:00 Friday ET

Amazon and Google face more intense antitrust scrutiny.

Amazon and Google face more intense antitrust scrutiny. In recent times, Justice Department and Federal Trade Commission have reached an internal agreement

+See More

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Apple Boston

2018-04-20 10:38:00 Friday ET

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus. The latter dominates the old school of thou

+See More

Climate change and ESG woke capitalism

Dan Rochefort

2022-11-30 09:26:00 Wednesday ET

Climate change and ESG woke capitalism

Climate change and ESG woke capitalism In recent times, the Biden administration has signed into law a $375 billion program to better balance the economi

+See More