Will Yellen and Powell launch MMT in the United States?

BloombergOpinion/Brian Chappatta

graphic image of greenback-like artwork with the word helicopter featured“In other words, with Powell at the helm of the Fed, Yellen running the Treasury and now Democrats controlling the federal government’s purse strings, we might finally see something closely resembling MMT live and in action. I’m hardly the only one who thinks this is a possibility — Blackstone Group Inc.’s Byron Wien released his much-anticipated 10 surprises of 2021 list last week, and prediction No. 6 was that the Fed and Treasury will ‘openly embrace’ MMT.”

USAGOLD note:  In a certain sense, the Fed launched MMT lite to combat the pandemic-induced economic crisis of 2020.  Now, the way appears clear for an even stronger response. Though Chappatta applauds the possibility, safe haven investors will take note. As Merryn Somerset Webb points out “everyone knows they need a safe haven, but everyone also knows the traditional ones (government bonds) no longer offer that safe haven.”  (Please see this morning’s Daily Market Report.)  As Chappatta, a Bloomberg columnist, reminds us in this editorial Yellen herself warned back in 2019 that “this is the way you get hyperinflation.” Now, the thinks Yellen, Powell & Co. see “circumstances are much different.”

Repost from 1-11-2021

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