Another First for Yellen
Ms. Yellen, who was the first woman to lead the Fed, would become the first person to have headed the Treasury, the central bank and the White House Council of Economic Advisers.
Separately, Mr. Biden’s transition team said he would nominate Alejandro Mayorkas to lead the Department of Homeland Security and Avril Haines as director of national intelligence. Former Secretary of State John Kerry will serve as special presidential envoy for climate change.
Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. “There is a huge amount of suffering out there. The economy needs the spending,” Ms. Yellen said in a Sept. 28 interview.
One of Ms. Yellen’s first decisions could be to decide whether to reactivate and potentially revamp, with Mr. Powell’s approval, a series of lending backstops the Fed and Treasury launched when the coronavirus pandemic convulsed markets this spring.
The parameters of one of those programs—to buy loans extended to small- and midsize businesses—might be “insufficiently generous,” she said. The Main Street Lending Program has extended just $4 billion in credit to more than 400 companies in its first four months of operation.
Treasury Secretary Steven Mnuchin decided last week that the programs would cease the purchase of loans or assets at the end of the year, declining an extension that had been sought by the Fed. The Biden transition team criticized Mr. Mnuchin’s decision.
Mnuchin May Be Right
Powell agrees to return unused relief money to Treasury at year end following Mnuchin’s decision.
Please consider Carnival Borrowing Without Ships Suggests Mnuchin May Be Right
Hours after U.S. Treasury Secretary Steven Mnuchin called for emergency lending programs to be allowed to expire, corporate bond investors continued to flood Carnival Corp.’s bankers with more than $11 billion in orders for debt that comes with no collateral protection.
For some, it was a sign that credit markets aren’t so fragile after all. After roughly $2 trillion of borrowing helped U.S. companies bolster their balance sheets with cash to weather the pandemic, investors have grown increasingly confident — perhaps even complacent — that the widespread corporate failures predicted by many earlier this year have largely been avoided. Granted, the Fed helped fuel nearly all of that debt issuance, and the investor demand supporting it.
And even if the immediate lifeline of $580 billion in backstop money is returned by the Federal Reserve to the Treasury, traders are betting that markets will fare just fine, anticipating that the government will step in again if new signs of stress emerge.
Hasn’t the Fed Made Enough Mistakes?
The Fed has blown four economic bubbles in succession keeping interest rates too low, too long.
Former Fed Chair Yellen pledges to continue this path, this time as Treasury Secretary supportive of the Fed.
Mish
Who cares what set of genitalia Treasury Secretary has?
Interesting Nomination. Currently the Demmicats are trying to defeat Judy Shelton on the grounds that she would compromise the independence of the Fed from the Treasury. JB’s move practically makes a merger!
You can’t make this stuff up.
Does this mean we get a male as US Treasurer?
We have not had one since I was born.
No matter who’s selected, the national debt is going to skyrocket along with the FEDs balance sheet. Trump will take the blame.
Wow! The stars are lined up. A double Put.
Powell/Yellen Put is the stuff of Inflationistas dreams. Now, with a little help from Dominion down in Georgia, a Senate flip would make Sidney’s Kraken look like a gnat.
MMT/UBI, Chopper Money, throw in a big war, and it’s Katy Barr the door.
My take? The Credit Cycle is turning. The Neo New Deal is being designed as we speak. It will be as unorthodox as anything we can imagine, including a Fed/Treasury Partnership that will electronically direct huge sums of fiatskies into massive fiscal boondoggles, because?,,,,,,”In the long run, we are all dead.” Especially TPTB. 😉
The new Kraken will be Animal Spirits, turbocharged.
Commodities, PM’s, Real estate, stocks, collectibles, nickels, anything,,,,but cash and bonds,,,, will likely be the place to be soon.
Inflation/Devaluation first, then interest rate rises. “Run Hot” is going to be an understatement by the time the POTUS elect of 2024 pulls his/her/it’s version of Paul Volcker out of the hat.
Another bonus double here? We’ve likely seen the peak Bond/Dollar bubble.
yay, good times on the way for stonks.
(wait a minute. it’s been good times all along!)
Yellen and Mnuchin might as well be the same person. This is why some of us make fun of red/blue politics so much. The rhetoric on wedge issues changes but the economic policy remains the same.
No, I disagree with you today….Yellen never worked for GS, she is an academic first, let and always, and she is already a known fiscal dove.
And she’s a celebrity superstar in banking….first woman Fed Chair.
Mnuchin is a low level grifter in comparison to Yellen…He made out like a bandit in the 2008 bailouts….I wonder just how much bailout money went to businesses he has some connection to this time…..
Yellen is much more likely to make substantive changes to matters other than her own net worth than Mnuchin did. With her at Treasury and her old team still mostly at the Fed…we could see some dramatic changes…but I’m not not sure if they’ll be for better or worse.
While it’s true that Mnuchin was a GS goon and Yellen comes from the academic side, they’re on the same team. Mnuchin was able to line his pockets because people like Yellen were willing to rig the game in his favor.
The focus will be on Wall St while simultaneously ignoring Main St. As David Byrne would say, same as it ever was.
Yes, she will ignore main street, but will pay a lot of lip service to it like she did when she was Fed Chair, “wage disparity is the problem, blah, blah, blah…”
Same as it ever was…the Fed acting like a psycho killer to the prudent.
In all likelihood immigration is going to be substantially restricted going forward. The birth rate is down to 1.77 births per women. A Japan has found, a shrinking population is massively deflationary. Is inflation really a risk at this point?
Don’t be fooled by the Ayn Rand hairdo.
This is a reminder of what I don’t like about Joe Biden.
I believe that the FED has been studying for a few years now methods of sending money directly into peoples’ bank accounts bypassing state and other federal agencies. It would eliminate the middleman and make it impossible for the states and maybe Congress to control who gets what. The fatal flaw of the 2008 policy was that it threw money at the top and hoped it would trickle down but of course it didn’t. This time to stimulate the economy they will send money directly to those who can use it. It is an aggressive approach. I wonder if they will do it.
That is the carrot.
You better believe there will be a “stick” attached to it.
Better carrot and stick to only a stick and no carrot.
Trickle down didn’t work. Levelling up?
At least in some cases (outside of peple gambling it away or it going to drugs) some kids might end up with better food on the table and shoes on their feet. There in lies the rub. Efficacy comes down to the values and morals of the recipients. What they do with resources available to them and why.
It’s our values and morals in aggregate that determine our just deserts. We are in a collective mess. Top to bottom.
The FED doesn’t give money away. They exchange USD for debt. What could be done and has been done in the past is the gov’t sends money directly to constituents with money obtained from selling bonds to the FED.
“Former Fed Chair Yellen pledges to continue this path, this time as Treasury Secretary supportive of the Fed.”
But I’ve been told many, many, many times that “diversity is our strength” and that we need to listen to the voices that had supposedly been suppressed prior to the last 50 years, so that we can gain a fresh, new perspective to everyone’s benefit. So, what are we celebrating with this first woman Treasury Secretary?
“The Fed has blown four economic bubbles in succession keeping interest rates too low, too long.”
So who is opposing them?