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

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy.

Becky Berkman

2019-12-07 11:30:00 Saturday ET

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy.

China turns on its 5G telecom networks in the hot pursuit of global tech supremacy. China Telecom, China Unicom, and China Mobile disclose 5G fees of $18-$2

+See More

William Easterly critiques several economic development policies and then indicates that bottom-up solutions often result in macro policy success in spite of nation states.

John Fourier

2023-05-07 10:27:00 Sunday ET

William Easterly critiques several economic development policies and then indicates that bottom-up solutions often result in macro policy success in spite of nation states.

William Easterly critiques several economic development policies and then indicates that bottom-up solutions often result in macro policy success in spite o

+See More

The Economist suggests that the world has learned few lessons of the global financial crisis from 2008 to 2009.

Becky Berkman

2018-09-07 07:33:00 Friday ET

The Economist suggests that the world has learned few lessons of the global financial crisis from 2008 to 2009.

The Economist re-evaluates the realistic scenario that the world has learned few lessons of the global financial crisis from 2008 to 2009 over the past deca

+See More

Our proprietary alpha investment model outperforms most stock market indices such as S&P 500, Dow Jones, and Nasdaq.

Andy Yeh Alpha

2019-02-01 15:35:00 Friday ET

Our proprietary alpha investment model outperforms most stock market indices such as S&P 500, Dow Jones, and Nasdaq.

Our proprietary alpha investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implem

+See More

Mike Pompeo switches his critical role from CIA Director to State Secretary in a secret visit to North Korea.

Peter Prince

2018-04-13 14:42:00 Friday ET

Mike Pompeo switches his critical role from CIA Director to State Secretary in a secret visit to North Korea.

Mike Pompeo switches his critical role from CIA Director to State Secretary in a secret visit to North Korea with no regime change as the North Korean dicta

+See More

The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment.

Fiona Sydney

2019-08-02 17:39:00 Friday ET

The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment.

The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment. Stanford finance professor John Cochrane disa

+See More