Federal Reserve Chair Janet Yellen’s term ends next February; President Trump’s choice of the next Fed boss is probably the most crucial appointment that he is likely to face.
Prez Trump and Congress are increasing Military spending while the new GOP tax plan reduces tax collections and the average taxpayer alreay owes $167,309 of Federal debt on top of any personal and local government obligations.
For taxpayers, government borrowing is a levy on their wealth; it is their money that government must use to repay its debts. Or these days, often enough, their grandchildreen’.
Do the math; how many average U.S. taxpayers will ever repay that much already borrowed and spent money? Who, if the taxpayers do not, will step in to save a bankrupt U.S. economy?
Russia, China and high priced oil kept Venezuela afloat; then fracking emasculated the oily Arabs plus Venezuela and dropped the oil price; today, Venezuelans are hungry and can’t find flights out anymore. China and Russia no longer prop up the Venezuelan economy as President Maduro morphs into a dictator. The Venezuelan Bolivar is dropping toward worthlessness. Such is the dismal end for spendthrifts, be they individuals or countries. Countries just take longer to face reality. Large countries take the longest … and usually fall the farthest. Rome today is eternal only for today’s Catholics.
Democrats hope the financial crunch will hit during the Trump administration, so that it can be blamed upon him and Republicans as occurred in 1929 at the start of the Great Depression. Republicans likely want to defer reality into the next Democratic majority. Prez Trump is choosing the next Federal Reserve Chairman now; we will see whether he selects an end or a continuance of the cheap money policies that have been propping up and camouflauging the torpid, overindebted economy. Whether, more simply, he will try to bring on or stall off the inevitable. Sooner will be very bad; later will be worse.
The Fed’s funny money and created credit amount to air propping up the inflated values, especially of stocks and real estate, that have permeated the U.S. economy. The next crash will see that air escape quickly, leaving many of us holding a lot less wealth than we had thought. Those holding debt obligations will find them diminished or worthless, even including some government debt. Even governments can’t drain blood from turnips nor money from flat broke taxpayers.
The President’s next Fed Chair might tell us a lot, unless the Prez plays it close to his vest by appointing a stranger without a public resume. Of course, that would be informative too.
jcurtisblog 