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
Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.
Jonah Whanau

2019-07-05 09:32:00 Friday ET

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes.

Warwick macroeconomic expert Roger Farmer proposes paying for social welfare programs with no tax hikes. The U.S. government pension and Medicare liabilitie

+See More
Yale macro economist Stephen Roach draws 3 major conclusions with respect to the Chinese long-run view of the current tech trade conflict with America.
Joseph Corr

2019-09-05 09:26:00 Thursday ET

Yale macro economist Stephen Roach draws 3 major conclusions with respect to the Chinese long-run view of the current tech trade conflict with America.

Yale macro economist Stephen Roach draws 3 major conclusions with respect to the Chinese long-run view of the current tech trade conflict with America. Firs

+See More
President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act.
Charlene Vos

2018-07-21 13:35:00 Saturday ET

President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act.

President Trump supports a bipartisan bill or the Foreign Investment Risk Review Modernization Act (FIRRMA), which effectively broadens the jurisdiction of

+See More
President Donald Trump delivers his first state-of-the-union address.
Daphne Basel

2018-01-29 07:38:00 Monday ET

President Donald Trump delivers his first state-of-the-union address.

President Donald Trump delivers his first state-of-the-union address. Several key highlights touch on economic issues from fiscal stimulus and trade protect

+See More
European economic integration seems to have gone backwards primarily due to the recent Brexit movement.
Daisy Harvey

2019-10-19 16:35:00 Saturday ET

European economic integration seems to have gone backwards primarily due to the recent Brexit movement.

European economic integration seems to have gone backwards primarily due to the recent Brexit movement. Brexit, key European sovereign debt, and French and

+See More
Capital market liberalization and globalization connect global financial markets to allow an ocean of money to flow through them.
Becky Berkman

2018-06-17 10:35:00 Sunday ET

Capital market liberalization and globalization connect global financial markets to allow an ocean of money to flow through them.

In the past decades, capital market liberalization and globalization have combined to connect global financial markets to allow an ocean of money to flow th

+See More