Janet Yellen Says America Needs ‘Great Skill’ And ‘Good Luck’ For A Soft Landing. We Are Screwed.

Janet Yellen Says America Needs ‘Great Skill’ And ‘Good Luck’ For A Soft Landing. We Are Screwed.

Have you ever seen former New England Patriots star Julian Edelman’s unbelievable catch as part of the team’s 25-point comeback in Super Bowl 51? It undoubtedly took “great skill” and “good luck” — thanks, in large part, to his years of practice and determination.

Unfortunately for the United States economy, the Federal Reserve is also going to need the same level of preparation and serendipity to avoid economic ruin, and U.S. Treasury Secretary Janet Yellen is no Julian Edelman.

On Sunday, Yellen told CNN, “The Fed is going to need great skill and also some good luck to achieve what we sometimes call a soft landing.”

More precisely, she is referring to an economy where inflation falls below 2% and unemployment remains low. If the American economy does not achieve that “soft landing,” it is likely we will be plunged into a recession after a hard landing.

While Yellen might seem confident that America can avoid such economic pain, Fed chairman Jerome Powell appears to disagree. Since the spring, the Fed has attempted to usher America toward economic success by hiking interest rates.

Yet, Powell maintains that not raising the rates would bring about more “pain.”

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell said at the annual policy speech at Jackson Hole, Wyoming. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

It is expected that the Fed will announce another round of rate hikes, something tech billionaire Elon Musk warns could cause deflation. Musk holds such dire predictions because he, alongside economist David Branchflower, believes that inflation has peaked.

Branchflower recently wrote in Politico that “policymakers are forgetting their history, and now they’re basically winging it” and risking raising rates when inflation is already cooling.

Other economists, like Goldman Sachs’ Tim Moe, argue that more effort is needed on closing the gap in the labor market.

“The real sticky bit of inflation is, of course, in the labor market, and that’s where there’s some progress that’s been made. But a lot more that has to be accomplished,” Moe told Business Insider.

“One of the issues or the indicators that we look at is the gap between job openings and the labor force,” Moe said. “That’s coming down. And that’s actually the key to a soft landing.”

Yet, according to the Fed’s Vice Chair Lael Brainard, the board’s main concern remains inflation and they feel confident in the labor market.

“Monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target,” she said recently. “The economic environment is highly uncertain, and the path of policy will be data dependent,” she added.

At this point in the column, readers might be feeling pretty uneasy about our nation’s experts’ ability to solve inflation.

When the treasury secretary is incorporating “good luck” and “great skill” into her economic remedies to avoid a hard landing or deflation, that uneasiness is entirely reasonable.

Just a reminder, here’s a metaphor for what that looks like:

Still don’t know how Julian Edelman made this catch. An All-Time great catch to help complete the greatest comeback in NFL history… legendary stuff.
pic.twitter.com/REB1JAQ28k

— Pats Buzz (@PatsBuzz) August 13, 2020

The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.

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