Janet Yellen admits U.S. labor market is worse now than in recession

Despite the Federal Reserve tapering off its monthly bond-buying purchases, Fed Chair Janet Yellen confirmed that low interest rates are here to stay for a little longer amid very poor labor market conditions.

The United States central bank confirmed that it does not have any immediate plans to raise a key short-term rate in the near future. The purpose of the bond acquisitions is to assist in keeping long-term loan rates low – the Fed argues that any increase in the short-term rate would increase borrowing costs and diminish stock prices.

In other words, according to Yellen, maintaining the present short-term rate would boost economic growth, spending and borrowing.

“I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely held by my fellow policymakers at the Fed,” Yellen said in her first major speech Monday since she gained the keys to the Fed.

To further her case for the continued monetary policy, Yellen took a page out of a politician’s playbook by citing personal stories of households struggling to make ends meet because of the difficult job market.

“They are a reminder that there are real people behind the statistics,” Yellen told attendees at a national conference on community reinvestment in Chicago. “The past six years have been difficult for many Americans, but the hardships faced by some have shattered lives and families. Too many people know firsthand how devastating it is to lose a job at which you had succeeded and be unable to find another; to run through your savings and even lose your home.”

Yellen also conceded that Americans still feel as if the country is in a recession and noted that it “looks that way in some economic statistics. In some ways, the job market is tougher now than in any recession.”

The Fed Chair’s comments have now put investors’ minds at ease because there was concern that the Fed would raise rates starting next year. It now seems as if artificially low interest rates will remain steady for the next few years.

Marc Faber stated Monday at a conference that the U.S. is at its peak in terms of bubbles, busts and debt.

“The U.S. reached a peak in prosperity and influence in the world in the 1950s or 1960s, but since the 1970s the superpower has been locked into a cycle of bubbles, busts and growing debt,” said Faber. “There are some people who claim to be economists who will tell you debts do not matter.”

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