Yellen: "If Current Fiscal Policy Settings Are Maintained, US Budget Will Be On Unsustainable Path"

Will be? Has this woman, or anyone else who is cheering the wonderful recovery in the US economy which is literally based on massive, and unrepayable, borrowing from the future, seen a chart of the exponential US federal debt? And another tidbit from a speech Yellen is currently presenting: "Fed's Yellen says long term securities buys "actually quite similar" to the Fed's traditional monetary policy approach." Well, of course: whenever the Fed does not get the desired result it merely goes in the market and buys various assets, monetary base be damned. As to how distorting the Treasury curve and all equity marrkets is part of the Fed's mandate, we leave to Ron Paul's first debate with Bernanke which is coming up soon.

Other soundbites from Yellen via Reuters:

  • Fed's Yellen says unemployment is likely to remain high for some time, inflation too low
  • Fed's Yellen says strongly supported Fed's bond buy decision, but it is no panacea
  • Fed's Yellen says US needs credible plan to bring down deficits while addressing economy's short-term needs
  • Fed's Yellen says premature fiscal tightening could retard already tepid economic recovery
  • Fed's Yellen says Fed has commitmentt and tools for eventual removal of extraordinary accomodation
  • Fed's Yellen says objective of treasury buys is to reduce long-term interest rates, spur growth
  • Fed's Yellen says US economic performance continues to be impaired by lingering effects of the financial crisis
  • Fed's Yellen says if current fiscal policy settings are maintained, US budget will be on an unsustainable path
  • Fed's Yellen says Fed policy should provide support for sustained expansion of global economy