President Barack Obama’s pick to head the Federal Reserve, Janet Yellen, says that the U.S. economy has regained ground lost to Great Recession but still needs the Fed’s support because unemployment remains too high at 7.3 percent. (Nov. 14)
Federal Reserve chair nominee Janet L. Yellen strongly defended the central bank’s stimulus efforts under questioning at her Senate confirmation hearing Thursday, saying the controversial bond-buying program has helped the economy recover.She offered no new hints of when the Fed would start reducing its purchases but indicated that, if confirmed, she was prepared to continue to aggressively use monetary policy to boost growth.
“These purchases have made a meaningful contribution to economic growth and improving the outlook” Yellen told the Senate Banking Committee.
In her opening statement, Yellen said the economy still had not fully recovered and needed the Fed’s continued support.
“A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” she said. “I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”
Yellen admitted that the program, which has more than quadrupled the assets on the Fed’s balance sheet since 2008 to nearly $4 trillion, cannot go on indefinitely.
But she gave no indication when she and other members of the policymaking Federal Open Market Committee would start tapering the size of the monthly purchases.
Because short-term interest rates are near zero and the Fed is nearly out of tools to stimulate the economy, Yellen said it was important not to remove the stimulus too early.
“It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy should the economy falter are limited,” she said.
Yellen is viewed as willing to tolerate higher inflation in order to reduce unemployment. But she was careful Thursday to note that she was watching inflation, which so far has been running below the Fed’s long-term target of 2% annually.
“The message that we want to send is that we will do what is in our power to assure a robust recovery in the context of price stability,” Yellen said.
But Yellen also said she was committed to helping average Americans, a position that has drawn her strong liberal backing.
“The effect of our policy is broadly to benefit all Americans, especially those who are seeing harm come to them and their families by high unemployment in a recovery that’s taken a long time and been frankly disappointing,” Yellen said.
The so-called Audit the Fed bill would allow the Government Accountability Office to audit the central bank’s monetary policy actions and decision-making. Yellen said she was committed to improving the Fed’s transparency but opposed the legislation.
“Allowing a central bank to be independent in formulating monetary policy is critical to assuring markets and the public that we will achieve price stability,” Yellen said.
Janet Yellen opposes the Audit the Fed bill and upholds the current policies, which essentially enables the wealthy ownership class to accumulate more wealth-creating, income-producing productive capital assets.
While some conservatives want to end the Federal Reserve and some progressives want to turn the Federal Reserve over to the government, both suggest an audit by government bureaucrats. The Just Third Way is for the citizens of the United States to own the Federal Reserve. As citizen shareholders we could hold the Federal Reserve accountable so that it creates money and credit for private sector production and enables more and more citizens to become owners of the new wealth created, and thereby be more accountable to those it is supposed to serve the most––citizens and our prosperity.
Instead of a focus on “full employment” we need to focus on “full production,” by optimizing both human labor and non-human productive capital inputs that are the means of production for the products and services needed and wanted by society. But most important is that we finance FUTURE economic growth so that simultaneously we create new individual owners of the FUTURE productive capital assets that will be formed, and ensure that these individuals benefit from full voting rights in the private property stock shares they acquire using interest-free capital credit loans and receive the full dividend profit earnings generated by their stock holdings. In this way, we achieve both “full employment” (at least in the short-term as we build a FUTURE economy that supports general affluence for EVERY citizen), and broadened, private, individual ownership of FUTURE productive capital assets, preventing the further concentrated ownership that has been our history.
Without a policy shift to broaden productive capital ownership simultaneously with economic growth, further development of technology and globalization will undermine the American middle class and make it impossible for more than a minority of citizens to achieve middle-class status.
Unfortunately, pursuing economic democracy has been frustrated by the systemic concentration of economic power and exclusionary access to future capital credit to the advantage of the wealthiest Americans. The so-called 1 percent rulers of corporations have rigged the financial system to enable this already rich ownership class to systematically further enrich themselves as capital formation occurs and technological industrialization spreads throughout the world, leaving behind the 99 percent to depend on income redistribution through make work “full employment” policies, government boondoggles, excessive military build-up and dependence on arms production and sales, and social welfare programs due to the lack of an alternative to full employment and the growing economic helplessness and dependency. The unsatisfied needs and wants of society are not in that 1 percent or for that matter the 5 percent; those people are not the ones who are hurting.
Once the national economic policy bases policy decisions on two-factor binary economics1, productive capital acquisition would take place through commercially insured interest-free capital credit, resulting in a quiet revolution in which economic plutocracy will transform to economic democracy. As for redistribution, there should be a substitute for inheritance and gift taxes––a transfer tax imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
The Federal Reserve needs to stop monetizing unproductive debt, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
The CHA would process an equal allocation of productive credit to every citizen annually exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets,
The shares would be purchased on credit wholly backed by projected “future earning” (savings) in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy.
Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.
The end result is that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on our only legitimate monopoly –– the State –– and whatever elite controls the coercive powers of government.
See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
