United States Treasury Secretary, Janet Yellen, has recently insisted that current rates of surging inflation are “not acceptable.” That said, she further insisted that the “lavish” spending Americans have seen among the Biden administration has actually prevented the economic situation from worsening. This stands in stark contrast to popular American belief. Populations nationwide have blamed President Biden’s American Rescue Plan, and its $1.9 trillion stimulus package, for the current financial situation.
According to the Daily Mail, the overall cost of living rose by 7.5% last month. The massive jump is the highest our nation has seen since February of 1982. Yellen further stated, “Certainly it’s not acceptable [for the cost of living] to stay at current levels.”
As per the outlet, the Treasury Secretary’s claims stood opposite those of President Joe Biden. The U.S. President has insisted that while inflation remains “elevated,” it is only a temporary phenomenon.
Regardless of the duo’s opposing claims, Yellen shared her belief that the Federal Reserve will “deploy their suite of tools in an appropriate way to keep the recovery on track, but also deal with the excess pressures that we have that are causing inflation.”
“Suite of tools” remains rather vague. However, the Daily Mail expressed certainty that recovery efforts would come in the form of increased interest rates. Overall, these tend to decrease overall spending and bring the economy back down to more acceptable levels.
Americans Face Worsening Hardships Among Rising Inflation
Inflation has already begun to have major effects on American households. So far, we’ve seen increasing energy prices as winter endures, while gas prices again soar and fluctuate. That’s not including the increased prices for food, shelter, and other necessities.
Treasury Secretary Yellen insists on the competency of the Federal Reserve. However, the potential solution the Daily Mail proposed suggests ordinary Americans will see further hardships among efforts to decrease inflation.
Most likely, with an increase in interest rates, Americans will suffer higher repayments for mortgages and loans.
Additionally, the report also suggests that increased interest rates may again see a massive fall in demand for goods and services. And while it would lower inflation rates, it would serve as the detriment to many businesses still suffering from the effects of the COVID-19 pandemic.
Interestingly, however, Yellen further argued that Biden’s American Rescue Plan actually “shield[ed] households and businesses from those adverse consequences [of COVID-19].” However, now, months after the stimulus package went into effect, American business owners again begin to suffer as inflation forces the rise in the cost of goods and services.
And while she’s advocated for the interference of the Federal Reserve, she also believes that inflation will drop with a mirroring drop in COVID cases. Consequentially, it would also serve to ease supply chain issues.