• 20 hours Banksy’s Littered ‘Monet’ Sells for $10M
  • 3 days Three Renewable Energy IPOs To Watch
  • 4 days Bitcoin Nears $13,000 As PayPal Joins The Crypto Fray
  • 5 days DOJ Declares The Obvious: Google Is A “Monopoly”
  • 7 days Alibaba Is About To Make History Again
  • 8 days Robinhood Users Are Latest Target Of Pandemic Hackers
  • 10 days The Hydrogen Boom Will Provide A $200B Boost To Wind And Solar Energy
  • 11 days Will The 5G Rollout Overshadow This Major Merger?
  • 12 days Corporate Bitcoin Holdings Boost Crypto Confidence
  • 12 days Indonesia Rolls Out Augmented Reality Innovation To Combat COVID
  • 13 days Banks Are Getting Rich On Pandemic Overdrafts
  • 13 days The Real Reason China Is Betting Big On Renewables
  • 14 days Europe Wants To End The Big Tech Monopoly
  • 14 days New Breakthrough Could Transform Rare Earth Mining
  • 15 days Waymo Set To Roll Out Fully Self-Driving Vehicles
  • 16 days Aramco Dividend Won’t Cover Saudi Budget Gap
  • 17 days Credit Card Debt Plummets Amid COVID
  • 18 days Biden Plan Targets “Wealthy” Taxpayers
  • 19 days McAfee Arrested In Spain On Tax Evasion Charges
  • 19 days South Asia Is Set To Unleash A Flurry Of IPOs
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

What Did Fed Chairman Yellen Tell Obama?

This week, President Obama and Vice President Biden held a hastily arranged secret meeting with Federal Reserve Chairman Janet Yellen. According to the one paragraph statement released by the White House following the meeting, Yellen, Obama, and Biden simply "exchanged notes" about the economy and the progress of financial reform. Because the meeting was held behind closed doors, the American people have no way of knowing what else the three might have discussed.

Yellen's secret meeting at the White House followed an emergency secret Federal Reserve Board meeting. The Fed then held another secret meeting to discuss bank reform. These secret meetings come on the heels of the Federal Reserve Bank of Atlanta's estimate that first quarter GDP growth was .01 percent, dangerously close to the official definition of recession.

Thus the real reason for all these secret meetings could be a panic that the Fed's eight year explosion of money creation has not just failed to revive the economy, but is about to cause another major market meltdown.

Establishment politicians and economists find the Fed's failures puzzling. According to the Keynesian paradigm that still dominates the thinking of most policymakers, the Fed's money creation should have produced such robust growth that today the Fed would be raising interest rates to prevent the economy from "overheating."

The Fed's response to its failures is to find new ways to pump money into the economy. Hence the Fed is actually considering implementing "negative interest rates." Negative interest rates are a hidden tax on savings. Negative interest rates may create the short-term illusion of growth, but, by discouraging savings, they will cause tremendous long-term economic damage.

Even as Yellen admits that the Fed "has not taken negative interest rates off the table," she and other Fed officials are still promising to raise rates this year. The Federal Reserve needs to promise future rate increases in order to stop nervous investors from fleeing US markets and challenging the dollar's reserve currency status.

The Fed can only keep the wolves at bay with promises of future rate increases for so long before its polices cause a major dollar crisis. However, raising rates could also cause major economic problems. Higher interest rates will hurt the millions of Americans struggling with student loan, credit card, and other forms of debt. Already over 40 percent of Americans who owe student loan debt are defaulting on their payments. If Federal Reserve policies increase the burden of student loan debt, the number of defaults will dramatically increase leading to a bursting of the student loan bubble.

By increasing the federal government's cost of borrowing, an interest rate increase will also make it harder for the federal government to manage its debt. Increased costs of debt financing will place increased burden on the American people and could be the last straw that finally pushes the federal government into a Greek-style financial crisis.

The no-win situation the Fed finds itself in is a sign that we are reaching the inevitable collapse of the fiat currency system. Unless immediate steps are taken to manage the transition, this collapse could usher in an economic catastrophe dwarfing the Great Depression. Therefore, those of us who know the truth must redouble our efforts to spread the ideas of liberty.

If we are successful we may be able to force Congress to properly manage the transition by cutting spending in all areas and auditing, then ending, the Federal Reserve. We may also be able to ensure the current crisis ends not just the Fed but the entire welfare-warfare state.

 

Back to homepage

Leave a comment

Leave a comment