Is Federal Reserve Chair Janet Yellen attempting to regain a shred of credibility she has left now that she is leaving the United States central bank?
That’s what it looks like following her semiannual testimony in front of Congress on Wednesday.
Yellen told Congress that she is concerned about the national debt, which has already topped $20 trillion and represents 75% of the debt-to-GDP ratio.
“I would simply say that I am very worried about the sustainability of the U.S. debt trajectory. Our current debt-to-GDP ratio of about 75 percent is not frightening but it’s also not low,” she said.
“It’s the type of thing that should keep people awake at night.”
Where was she in the last presidential election? What about two years ago? Is she only issuing warnings because Donald Trump is president?
Of course, if anything, the Fed is primarily responsible for astronomical debt levels in both government and the private sector. With near-zero interest rates for seven years, the national debt climbed close to 80 percent and private debt is about $15 trillion.
The national debt will only increase with President Trump’s tax reform plan. Sure, it might succeed in cutting taxes, but it will expand the budget deficit because there isn’t a single bill in Washington that cuts spending. This means that the deficit will return to the $1 trillion mark within the next couple of years.
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