U.S. Inflation Fears Grip Investors, Biden to Announce $6 Trillion Budget
Posted on 05/27/2021
U.S. President Joe Biden is prepping to show a massive spending proposal, which includes US$ 6 trillion in government funding for the next fiscal year. This amount would bring federal spending up to levels not seen since World War II and send inflation even higher. U.S. Treasury Secretary Janet Yellen pleaded with congressional leader to step up spending, saying that the U.S. government is operating on a budget that is more than a decade behind the times. Yellen said that inflation-adjusted spending has remained stagnant for 11 years.
Since Biden took office, prices from food, lumber, used cars, and other items have drastically risen. To make matters worse, from COVID lockdowns, supply chain setbacks has put a strain on certain goods.
Biden’s budget would have the U.S. continue running deficits of more than US$ 1 trillion. For Americans, taxes are also set to increase by US$ 3trillion over the next decade in line with Biden’s proposed hikes in corporate rates and plans increasing the taxes of American families over an income range.
Larry Summers, the former director of the National Economic Council for President Obama and a Clinton advisor issued a warning for Biden on Wednesday night. Summers at a CoinDesk conference: ‘We’re taking very substantial risks on the inflation side.
“I think policy is rather overdoing it. The sense of serenity and complacency being projected by the economic policymakers, that this is all something that can easily be managed, is misplaced.”
While testifying before the Senate Banking Committee, JPMorgan Chase CEO Jamie Dimon said, “If that money is wasted, it is not productively spent, we will have more inflation, less productivity, slower growth and the American democracy you will have lost even more credibility eyes in the world.”
U.S. bond yields have jumped as inflation expectations have risen. Investors are contemplating what the prospect of higher bond yields means for other assets.
