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

Tech stock prices tumble due to Trump's criticism of Amazon's tax avoidance, Facebook data breach of trust, and Tesla autopilot incidence.

Dan Rochefort

2018-03-29 14:28:00 Thursday ET

Tech stock prices tumble due to Trump's criticism of Amazon's tax avoidance, Facebook data breach of trust, and Tesla autopilot incidence.

Share prices tumble for technology stocks due to Trump's criticism of Amazon's tax avoidance, Facebook user data breach of trust, and Tesla autopilo

+See More

A small fraction of the population enjoys most capital and wealth creation.

Jacob Miramar

2017-03-15 08:46:00 Wednesday ET

A small fraction of the population enjoys most capital and wealth creation.

The heuristic rule of *accumulative advantage* suggests that a small fraction of the population enjoys a large proportion of both capital and wealth creatio

+See More

Donald Trump defies the odds to become the new U.S. president.

John Fourier

2016-11-08 00:00:00 Tuesday ET

Donald Trump defies the odds to become the new U.S. president.

Donald Trump defies the odds to become the new U.S. president. He wants to make America great again. He seeks to repeal Obamacare. He has zero tole

+See More

Chicago financial economist Raghuram Rajan views communities as the third pillar of liberal democracy.

Jonah Whanau

2019-02-25 12:41:00 Monday ET

Chicago financial economist Raghuram Rajan views communities as the third pillar of liberal democracy.

Chicago financial economist Raghuram Rajan views communities as the third pillar of liberal democracy in addition to open markets and states. Rajan suggests

+See More

U.S. inflation has become sustainably less than the 2% policy target in recent years.

Jonah Whanau

2019-08-03 09:28:00 Saturday ET

U.S. inflation has become sustainably less than the 2% policy target in recent years.

U.S. inflation has become sustainably less than the 2% policy target in recent years. As Harvard macro economist Robert Barro indicates, U.S. inflation has

+See More

Modern themes and insights in behavioral finance (Part 2)

Chanel Holden

2022-02-15 14:41:00 Tuesday ET

Modern themes and insights in behavioral finance (Part 2)

Modern themes and insights in behavioral finance   Lee, C.M., Shleifer, A., and Thaler, R.H. (1990). Anomalies: closed-end mutual funds. Journal

+See More