For regular readers you would be aware of my disgust in the manner the U.S. Federal Reserve has been politicized – both Obama and Le Garde (IMF) – have had an obvious influence on the policies of The Fed – to maintain low interest rates – to the detriment of the U.S. economy.
The low interest rates have crippled savers – public and private pension funds – and assisted in increasing the global debt burden.
A bubble of unsustainable debt – supported by low interest rate regime – which will burst – and drive the world economy into the abyss.
The global economy is a balance sheet – for every debit there is an equal and corresponding credit – extending this – for every weak currency and economy there will always be a benefactor.
Yellen – The Federal Reserve Chair – chose to support this stupidity from the outset – there was a ‘window’ to increase rates in September 2015 – this was ignored – decreasing the value of the U.S. currency – forcing a continuation of a currency wars – as other Central Banks attempted to counter a decrease in trade.
Now we have Senator McHenry (Republican) – has taken Yellen to task – and full transcript of his letter to The Fed is available to be read here (1).
It is his conclusion that should remind the Fed of their purpose:-
“it is incumbent upon all regulators to support the U.S. economy, and scrutinize international agreements that are killing American jobs. Accordingly, the Federal Reserve must cease all attempts to negotiate binding standards burdening American business until President Trump has had an opportunity to nominate and appoint officials that prioritize America’s best interests.”
The principle role of the U.S. Federal Reserve is to support the U.S. economy – that has not been done for the past ten years.
Wonder whether a few Republican Senators have grown a couple – since Trump has taken over?
Then again will the global central banks be able to wean their countries off the debt laden experiment?
Me thinks not – once interest rates rise – the affordable becomes the unaffordable – then a global depression and austerity programs will come to the fore.
Cannot postpone the inevitable forever – interest rates will normalize – at a great cost to humanity.