If Congress actually passes President Biden’s blowout spending bills, we’re in for a devastating breakout of inflation. There’s an effective way to ease the pain.
But as this episode of What’s Ahead notes with astonishment, Janet Yellen refuses to do it: Sell bonds with a duration of 50 years or 100 years with a coupon of 3%.
That yield seems generous only in today’s world of extremely low interest rates. But as inflation heats up, it will look low.
So it would make sense to lock in low long-term rates.
More to the point, in fighting future inflation these bonds would raise immense sums of money from existing savings and holdings of cash rather than having the Federal Reserve print gobs of new money out of thin air, which would be devastating for the economy—and for stocks.
For the sake of us all, Janet Yellen should reverse course—immediately.