Guess Who’s Back, Back Again

“She’s walking into a nightmare. People are going to be getting evicted, losing their houses, and state and local governments are facing disastrous situations. These are horrible problems, but Yellen has been around so she knows both her economics and Washington. If there’s a way to get through this, she’s as good as anyone.” — Dean Baker, liberal economist

Per pretty much every news outlet on Twitter, President-elect Biden is set to appoint former Fed Chairwoman Janet Yellen to become the next Treasury secretary. If the Senate confirms, Janet would become the first woman to hold the job, a feeling she’s all too familiar with. Biden’s selection sets the seasoned labor economist to head his administration’s efforts to distribute the necessary aid from the virus and mass shutdowns.

Yellen, who was the America’s first female Fed chair, will soon have a matchless public service résumé as treasury chief, president of the Federal Reserve Bank of San Francisco, and a top economic adviser to President Bill Clinton. While Jan was in the Clinton administration she backed efforts to balance the federal budget, but has since pivoted, along with her Keynesian cronies, by increasing government spending now that interest rates are basically on the precipice of going negative.

Sitting Treasury Secretary Mnuchin is set to transfer $455 billion in unspent Cares Act funding into an account that Janet will need Congress authorization to use. Most of the money has already gone to support Federal Reserve emergency-lending provisions, but the rest will be placed in the agency’s General Fund.

“Let me just put this in perspective, all those other facilities, we only have about $25 billion of loans outstanding. And to the extent that we need to do more, we have over 750 billion of firepower between the what’s in the Exchange Stabilization Fund and what the Federal Reserve can do going forward. These can be reactivated so markets should be very comfortable that we have plenty of capacity left.” — Steven Mnuchin

This game of musical chairs could relinquish about $80 billion available in the Treasury’s Stabilization Fund, a chunk of money that can otherwise be used with kid gloves by the Treasury chief. Conversely, the Cares Act funds had specific uses, and weren’t available for general government spending impetus. I mean, could you imagine if Janet turned right around and withdrew the money back out of the account? Republicans would go cray-cray.

With the clock ticking, Secretary Mnuchin is working insatiably to recoup $429 billion from the Fed to support the central bank’s emergency lending facilities, and another $26 billion that the Treasury came into for direct loans to companies. Both tactics were created under the Cares Act in March as the coronavirus swept the country.

Yellen told The Washington Post in August that it was “urgent” to ratify more fiscal stimulus in response to the economic decline. She was especially worried about cities and municipalities running out of money and low-income workers suffering irreparable damage from being unemployed for than a year.

“Capitalism is Altruistic, and it requires a certain altruism of each of us.”
― Hendrith Smith

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