2022年1月17日

U.S. Treasury Secretary Yellen: Impact of stimulus plan on jobs recovery Bitcoin is highly speculative

On Monday, U.S. Treasury Secretary Janet Yellen said she would judge the success of Biden’s new stimulus plan by how quickly U.S. unemployment returns to pre-pandemic levels, and she raised questions about bitcoin.

Ms Yellen, speaking in an interview at a New York Times online event, also played down the risk that debt levels could rise as a result of the relief bill. Because of low interest rates, U.S. interest spending is not high as a percentage of gross domestic product, she said. The government needs to control the epidemic before the economy can return to normal. Stimulus plans need to ensure that people’s lives and livelihoods are not permanently damaged by COVID-19.

The January non-farm payrolls report showed the U.S. unemployment rate at 6.3 percent, still far from the 3.5 percent low that was widely seen as full employment before the outbreak. The Treasury Secretary said that because at least 4 million people dropped out of the labor force for various reasons during the outbreak, the real unemployment rate was closer to 10 percent.

And by having a stronger economy, the money will pay for itself.

In response to concerns about debt risk, Ms Yellen said that in a very low interest rate environment, traditional measures to assess debt, such as the red line of 100 per cent of GDP, are less important. A ‘more important indicator’ is interest payments on the federal debt as a percentage of gross domestic product, now about 2%, where they were before the Fed began aggressively raising rates in 2007.

Yellen also said the Treasury is trying to take advantage of the current favorable interest rate environment by issuing long-term debt. When asked if she would consider issuing a 100-year bond, she said the market for such bonds would be very small with “limited” interest rates.

The former Fed chairman also said it was time for the US Treasury Department to study the merits of digital dollar currencies. Blockchain-based digital dollars, rolled out by the Federal Reserve, could lead to faster, safer and cheaper payments, but many issues need to be studied, including consumer protection and money laundering.

Yellen’s comments are the latest attack on cryptocurrencies by senior government and central bank officials in advanced economies. In mid-January, European Central Bank President Christine Lagarde also accused cryptocurrencies of fueling illegal activities. “For those who think that Bitcoin can ever become a currency, sadly it’s not. It’s a highly speculative asset that can see completely reprehensible money laundering behind it.”

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