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Home | Blog | Will Janet Yellen Lend Trump a Helping Hand?

Will Janet Yellen Lend Trump a Helping Hand?

  • Janet Yellen
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Tags Big GovernmentThe FedU.S. Economy

02/06/2017

CNBC claims that the Fed has been “crying wolf” and will back off raising interest rates even a tiny bit more. There are reasons why they might want to back off. China is selling US securities, other central banks are selling, and the Fed might be afraid to sell any of their holdings, which would have to accompany a rate increase. It was fear of a collapse in the federal bond market in the first place that brought us all the frantic QE bond buying with newly created money.

Even so, it is much more likely that the Fed will raise rates anyway, at least a little. Why? Because Yellen and the board are still clinging to the rationalization that holding rates so artificially low helps the economy as well as the government, despite all the evidence to the contrary. 

This is the great irony. The Fed thought it was helping Hillary Clinton by holding rates so low when it actually might have elected her by raising them. Now the last thing it wants to do is help Trump, so it will raise rates, but actually that will help the economy and therefore help Trump and the hated Republicans. The Fed is so blinded by false theory that it cannot even get an illegal political intervention right.

See The Fed that cried wolf: Rates forecast in doubt.

Hunter Lewis is author of nine books, including Where Keynes Went Wrong, Free Prices Now! and Crony Capitalism in America: 2008-2012. Lewis is co-founder of Against Crony Capitalism.org as well as co-founder and former CEO of Cambridge Associates, a global investment firm. He has served on boards and committees of fifteen not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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