• GB Davis

The Enemy Within - 1/31/21

On December 22, 2020, in, “US Treasury and the Fed to Begin Rules Based Transparent Approach to Budgets & Stimulus,” I commented, in part, drawing from Fitch, “Russia has implemented a moderate counter-cyclical policy response to soften the economic impact of reduced external demand and local containment measures related to the pandemic. On the monetary front, the BoR took measures to support local liquidity and credit availability, and cut rates by 100bp in June to a record low 4.5% under inflation targeting. It is signalling that further easing is possible, as inflationary risks remain in check. Russia’s fiscal policy response to the crisis at 2.9% of GDP (including 0.5% in guarantees) for 2020 is moderate in the context of rating and regional peers. The fiscal measures provide additional social and healthcare spending, transfers to local and regional government, support for small and medium-size businesses through permanent reduction in payroll taxes and tax deferrals, as well as measures to support specific sectors of the economy. (while also adding, "Fitch believes that a potential temporary and modest deviation rom the budget rule’s structural primary deficit of 0.5% of GDP),” and adding, “the United States is far too large of an economy to not have certain aspects more carefully planned, and ascribed with forethought as to limitations, and responses to crisis… Yellen's Legacy will be working with Powell on a Rules Based Approach for the US Treasury and precisely these types of issues related to the Fed's Emergency Powers - while working with Congress on a properly balanced budget and when, how and how far to deviate therefrom (just as RUS has done)”

All hope I had for Janet Yellen as Treasurer were crushed by her own misdoings today and advancement of a political agenda without objective fact based fiscal prudence or anything remotely resembling sound economic theory – hold that thought – let’s rewind: on August 13, 2020, in, “Yellen is Irrelevant,” I commented, “A late announcement at the Biden-Harris presser for the day, an appearance by Janet Yellen. For me Yellen falls into the category of overrated Central Bankers joining Epstein buddy Larry Summers and economic dolt Alan Greenspan. Look, no one can hold a candle to the greatest central banker ever: Ben Bernanke – so that’s not a fair comp for her, or anyone; however, she is intellectually inferior to: Brainard, Betsy Duke, Susan Bies, Susan Phillips and every last female Fed Governor that preceded her. It’s telling that Yellen is being trotted out here – and a political Federal Reserve is a problem – how did American politics get here? What could she possibly say that is additive? She’ll go straight for her ’04 playbook on fiscal stimulus and Keynesianism to gap fill aggregate demand during this recession to combat high unemployment – yet, these are things (a) ALREADY known to Professor Powell and the Federal Reserve Board; and (b) already thought through and reacted to – this is a desperate move by Biden/Harris, an unnecessary distraction. We didn’t need Janet Yellen in the first place – and we don’t care for her views to start with; let alone in a political manner.”

Now, fast forward, back to today: this past Friday, January 29, 2021, via the official POTUS Twitter account, Emperor Biden states, “As Treasury Secretary @JanetYellen said during today’s meeting, the price of doing nothing when it comes to economic relief is too high. Congress must act quickly and pass the American Rescue Plan to deliver relief and help dig us out of this crisis,” with a photo of a meeting at the White House – yet there is no Economic Chart, Deck, Presentation or anything – this is outright propaganda. (sourceà https://twitter.com/POTUS/status/1355292815203454980?s=20)

Today, Janet Yellen via Twitter, “The President is absolutely right: The benefits of acting now — and acting big — will far outweigh the costs in the long run.” (source à https://twitter.com/JanetYellen/status/1355885276816683011?s=20)

Once again, with no actual legitimate support – more propaganda – do you know how many fallacies of logic this fails? Many, here are a few:

Appeal to False Authority à


False Dichotomy, inferred à


Homunculus argument à


Proof by assertion à


Reification à


Slippery slope à


Argument from authority à


Appeal to poverty à


Ipse dixit à



We are tried of the LIES. We are tired of a low-teens Congressional approval rating. We are tired of a perpetual deficit. We are tired of de facto slavery of the youth evidenced through ATH median hours needed to afford one (1) share of the SP500; or the cost of housing to median wages. We are tired of a WEF #73 Ranking for the United States for Government Waste – because people abuse their positions and misled the public with no consequences and no legitimate system of checks and balances – the type of folly that led to the fall of Rome, to the French Revolution, to the destruction of societies (truths).

Here is what the MATH says – on January 22, 2021, in “Stimulus Overkill,” drawing directly from Moody’s, we noted with their data tables (attached):

(1) The Steady State US GDP Growth Rate in 2024 under the $1.9 Trillion Biden Stimulus is 1.9% -- compared to, No Stimulus (i.e. $0) at 2.3% -- this is a PERMANENT REDUCTION AND HIT TO THE U.S. ECONOMY – FOREVER – A REDUCTION TO THE EARNING POTENTIAL OF THE U.S. ECONOMY – FOREVER.

(2) Unemployment (U3) in 2024 under either plan is 4.4%

(3) Taken together (#1 and #2), therefore, this is a bad, terrible decision – and Janet Yellen is a LIAR, prima facie; advancing political agenda – and unsound political agenda that will harm the United States – FACTS.

(4) NOW, we noted ALSO, support of why $0 of stimulus is fine. E.g. on January 30, 2021, we (me), noted, “on Jan. 28, the advance 4Q20e US GDP is 4.01%. Further, the New York Federal Reserve U.S. GDP Nowcast for 1Q21e printed 6.48% on Friday, January 29, 2021; showing a decline of 0.17 week-over-week from 6.65%; largely due to Real Personal Consumption Expenditures (PCE) impacting the reading by -0.31. Do note: US Savings rate is up. THIS IS A VERY VERY VERY STRONG READING AND IS ACCELERATING over 4Q. What else is accelerating? Economic Cycle Research Institute’s (ECRI) U.S. Weekly Leading Index (WLIW) for the week ending January 29, 2021, as reported January 22, 2021, increased, again to 150.1 with a Growth Level of 19.0; making the 21st consecutive week of positive reading; and, also, accelerating readings. The 150.1 level is generally the level for this index in late-February 2010 as well as Oct-18 to Nov-19 (for context); and, a growth reading of 19.0 has not been seen since January 2010. Further, the WLIW reading marks the 40th week since the most recent negative trough for this index,” and, “IT'S ALMOST LIKE WE DON'T NEED MORE STIMULUS - RIGHT NOW. (SARCASM, WE DON'T NEED MORE STIMULUS RIGHT NOW)”


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