Tuesday, January 24, 2023

Even Yellen Has Limits, Opposes Trillion Dollar Coin Idea Again

Click here to read the original Cautious Optimism Facebook post with comments

2 MIN READ - From the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff

Treasury Secretary Janet Yellen on rekindled proposals for the U.S. Treasury to mint trillion dollar platinum coins to continue spending without raising the debt limit:

"It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that's a gimmick. The Fed is not required to accept it, there's no requirement on the part of the Fed. It's up to them what to do."

And Yellen in 2021:

"I'm opposed to it, and I don't believe we should consider it seriously. It's really a gimmick, and what's necessary is for Congress to show the world can count on America paying its debts."

Read details here:


Given that she also testified before Congress in 2022 that she does not believe corporate greed causes inflation, and testified as Fed Chair that raising the nationwide minimum wage would result in a significant number of low-skilled workers losing their jobs we know Yellen is not always wrong.

However her occasional flashes of correctness have to be kept in context with her repeated 2021 and 2022 predictions that inflation was "transitory" and would go away on its own, her recent television interview blaming the American public for causing price inflation, her opposition to adopting any rules-based discipline at the Fed, her efforts to coordinate a "minimum global corporate tax" with other countries to stop companies from relocating to tax havens, and (verdict is still out on this one) her prediction that the Biden administration can avoid a recession.

Altogether America can do better than Yellen.

ps. In a bizarre choice the attached article interviews Rohan Grey, a law professor at Willamette University, for an opinion on the debt ceiling debate and trillion dollar coin proposal where he argues Congress has to do whatever it takes to keep the federal government spending, spending, spending.

But Grey is one of the most visible/vocal advocates of Monetary Monetary Theory, an eccentric economic movement that states Congress can fund a Green New Deal, universal healthcare, free college tuition, a guaranteed jobs program, Universal Basic Income, and minority reparations all with the printing press and little to no inflationary repercussions.

After a brief burst of popularity among far left disciples, MMT has been wholly discredited by the last year's bout of inflation. The federal government never got started spending on any of the MMT wish-list of uber-programs and just what little money creation the central bank embarked on to counter Covid lockdowns produced elevated inflation rates that it's now scrambling to contain.

Yet of all the monetary economists available out there to choose from Business Insider picked an MMT apostle to interview? Who just coincidentally urging spend, spend, spend?

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