-2 C
New York

Is that this Janet Yellen’s demise? A latest Treasury secretary is due


Treasury Secretary Janet Yellen sure looks like she’s got the backing of the “Big Guy,” aka Joe Biden, to stay as steward of the $25 trillion US economy.

There are continued denials by the White House flack that Yellen is about to be jettisoned, despite persistent speculation on the contrary.

Yellen is doing numerous media, taking a victory lap for her continued role in helping Sleepy Joe shape economic policy, signaling she desires to be around.

And yet the speculation is constant.

Wall Street execs with White House connections tell me she’s a probable goner; it’s not a matter of if, but when the president will pull the plug on what’s shaping as much as be a disastrous two years of policy resulting in what many economists see as a baked-in 2023 recession.

You may’t pin the economy’s faults all on Yellen, after all. But she’s the highest cheerleader for an economic dunderhead. Biden’s goal since being elected in 2020 was to be more “transformational” (progressives love that word) than his old boss, the economic progressive Barack Obama.

That meant trillions of dollars in unnecessary spending rationalized as essential due to the pandemic. Recall: The outlays got here mainly within the waning months of COVID when business closures were ending.

The Biden administration has denied Yellen might be ousted.Michael Reynolds – Pool via CNP

Yellen oversaw Biden’s push to ramp up the economic regulatory infrastructure at a time when post-lockdown supply-chain bottlenecks were starting to seem, thus making them worse.

Combined with money-printing from the Fed (also endorsed by Sleepy Joe and Yellen), the result could possibly be predicted by anyone who has taken Econ 101 (and plenty of sentient beings who haven’t): Massive inflation that’s an onerous tax on the working class.

Yellen, after all, has taken greater than just Econ 101. But she has numerous experience in government and academia (Fed chair, etc.) devoid of real-world experience.

Inflationary spiral

And it shows. She spent months downplaying the inflationary threat as transitory until it was proven to not be. Ideological lefty economists of her ilk often have a soft spot for the inflationary spiral because it often accompanies growth and wage gains, as now we have today.

Jerome Powell leaves after a news conference in Washington, DC on Dec. 14, 2022. The Fed under Jerome Powell has indicated inflation continues to be high.Reuters

Yet history shows that wage gains never sustain with prices, resulting in stagflation because people can’t afford either the extras or, increasingly, the fundamentals. It might probably be unwound only through pro-growth policies (deregulation, which the Biden people and Yellen refuse to do) or if the Fed steps in, smothering the inflationary burn through higher rates of interest, lower growth, and a probable recession.

That’s what we face now. The Fed under Jerome Powell has signaled that inflation, though abating, continues to be stubbornly high — and wages aren’t keeping pace. There might be more rate increases irrespective of how much markets are clamoring for a so-called pivot. Biden has shown no inclination to let up on regulation. Under this scenario, odds are we’re heading right into a recession; it’s only a matter of how deep of a downturn we are going to see.

Someone could have to take the autumn for the economic mess that’s about to hit the nation, probably in the brand new yr, and the betting in DC, relayed to top Wall Street execs, is that it should be Yellen. The excellent news is that her replacements are all a step up within the style of economic intelligence that is basically needed.

Gina Raimondo speaks about semiconductor chips subsidies during a press briefing at the White House on Sept. 6, 2022. Commerce Secretary Gina Raimondo is a number one candidate to switch Yellen.Reuters

Yellen, as I discussed, has no real-world business chops. Now contrast that with the background of the individuals who will likely replace her: Within the lead, I’m told, is Commerce Secretary Gina Raimondo, formerly the successful governor of Rhode Island and an economic centrist who helped reform the state’s pension fund. She also worked in enterprise capital, starting a VC fund that seeded businesses within the state.

I’ll take that over Yellen’s wonky textbook-driven approach to economics any day.

One other leading contender on the shortlist is Brian Moynihan, the CEO of Bank of America, sources near the White House tell me. Bankers are a troublesome sell to powerful progressives, like Massachusetts Sen. Elizabeth Warren, who has a say over Biden’s economic appointments.

Brian MoynihanBrian Moynihan nursed Bank of America back to health after the 2008 financial crisis.Shutterstock

But Moynihan took over BofA at certainly one of its darkest hours within the aftermath of the 2008 financial crisis and brought it back to health. Today the nation’s second-largest bank by assets is on strong footing due to his regular hand over the past decade-plus. Not a nasty economic point man in case you expect a recession in 2023.

Could or not it’s Gensler?

The dark horse within the race to succeed Yellen is Securities and Exchange Commission Chair Gary Gensler, a darling of progressives. He has steered the investor-watchdog agency into the ESG culture wars with latest proposals that will force corporations to reveal how they’re reducing their carbon footprint.

Gary Gensler testifies before the Senate Banking, Housing and Urban Affairs Committee during an oversight hearing on Capitol Hill in Washington, DC on Sept. 15, 2022. Gary Gensler has proposed forcing corporations to reveal non-financial metrics reminiscent of how they’re reducing their carbon footprint.Reuters

He’s also probably the worst of the three candidates and can likely generate opposition from Senate Republicans and Democratic moderates he needs to realize confirmation.

But his somewhat prescient warnings concerning the perils of unregulated crypto, his background as a banker at Goldman Sachs, and his work in various government economic-related jobs are a plus.

One thing is for certain: Any of the three can be an unlimited improvement over what now we have now.

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles