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How the Fed is enabling Congress’ trillion-dollar deficits


Mises Institute/Ryan McMaken/8-26-2021

image of Uncle Sam saying I need vast sums of money

“With the Federal Reserve’s annual Jackson Hole symposium there’s been much talk about when the central bank might allow interest rates to rise, presumably through the process of ‘tapering.’ Tapering would mean easing monthly bond purchases, which would ‘effectively increase interest rates.“

USAGOLD note: In his Jackson Hole speech, the Fed chairman attempted to give the impression that the central bank would not move on rates but deploy tapering by the end of the year. It is difficult, as McMaken suggests, to understand how the two can be separated. How does the central bank curtail government bond purchases without sending rates higher? He goes on to take the matter a step further. “[T]he federal government,” he says, “needs to borrow a whole lot of money at unprecedented levels to fill that gap between tax revenue and what the Treasury actually spends.”

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