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Gary Kaltbaum: Janet Yellen ‘Just Doesn’t Have a Clue’

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Financial analyst and Fox News contributor Gary Kaltbaum was not impressed with Federal Reserve chairwoman Janet Yellen’s congressional testimony this week.

“I don’t think she knows who won the Super Bowl,” he recalled saying to Fox’s Neil Cavuto, during his appearance on Breitbart News radio Friday morning.

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“It was the most ineffective, inefficient testimony I have seen in a long time,” Kaltbaum said on Friday.

Just remember something very important here: this woman is the number one financial go-to person in the world.  And she didn’t just sound like it – she showed that she just is not on top of anything that’s going on there, and she is just reactionary. Any Tom, Dick, and Harry can tell you what’s been in the rear-view mirror. You need somebody to tell you what’s to come, and she just doesn’t have a clue, unfortunately.

A clueless Federal Reserve chair is big trouble right now, because the stock market is beginning to tremble with signs of an approaching recession. As Breitbart News host Stephen K. Bannon observed, big banks around the world are sending out distress signals as the President’s Day weekend begins. Kaltbaum noted that U.S. stocks opened up, but it wasn’t much of a silver lining, because the American market has been down so much lately.

He explained that crashing mega-bank stocks are a harbinger of things to come in the rest of the market, as smart money climbs into bomb shelters ahead of a blast the rest of us will know about soon enough.

“Let me tell you what happened this morning,” said Kaltbaum. “The head of J.P. Morgan, Jamie Dimon, came out and bought $26 million of his own stock, with his own money… not because he thinks he’s going to make money, but because he’s got to show confidence in his stock. That tells you they’re worried like all heck.”

The conversation turned to Yellen’s disturbing refusal to rule out negative interest rates during her Capitol Hill testimony – a concession that recession might be on the horizon. Kaltbaum noted that while negative interest rates have been employed in other countries, notably in Japan and Sweden, the United States has never resorted to them before.

“There’s about $7 trillion of debt around the globe right now that’s negative,” he said. “If we do it… let me be clear about this. Every country that has tried it in the last few months, their market has crumbled.  If we do it, that would just be following the lemmings into the sea.”

Based on its past actions, Kaltbaum thought the Federal Reserve was more likely to address the current downturn by printing more money… only to discover that particular tactic has lost its effectiveness, after years of using easy money to goose a sluggish economy. If the money-printing trick doesn’t work this time, he predicted it would lead to a long-overdue crisis of confidence in central bankers.

Kaltbaum saw little reason to be confident that anyone in the political class, on either side of the aisle, understood the magnitude and complexity of the new worldwide financial crisis, or had a good plan for dealing with it. He was disappointed neither Republican nor Democrat presidential debates included tough questions from informed moderators on the subject.

“I will promise you one thing: probably in the next two to three months, it’ll be front and center – I don’t know to the extent it was in October and September of ‘08, but it’s gonna be front and center, because you are going to be hearing the words: ‘We are now in recession.’  There are many areas of the economy that are already in it, and we’re at a tipping point here.  You’re going to start hearing about numbers like minus one percent in economic growth.”

Kaltbaum agreed with Bannon that the coming economic crisis was likely to overshadow every other aspect of President Obama’s legacy, securing his place in history as a president who not only “kicked the can down the road” while the economy soured, but set the stage for a far worse crisis than America needed to endure.  He compared President Obama’s near-doubling of the national debt, and absolute refusal to reform wasteful federal spending, with Candidate Obama’s promises to weed out waste by going through the federal budget line-by-line, and wipe out half of the federal deficit.

Instead, “on the first day he got into office, he announces an $800 billion bloated giveaway – which, by the way, because of baseline budgeting, stays in the spending year-in and year-out – and that’s what’s caused the problem,” Kaltbaum recalled.  “I think markets are waking up to all this.  We keep hearing that we’re the sane people in the room, our country.  No, we’re the most insane.  We have the most debt out there.  I keep hearing, ‘well, as a percentage of GDP…’  Markets don’t care about that!  They care about totals.  it’s outrageous, and the CBO just came out and said we’re going to $27 trillion, and we’re going back to trillion-dollar deficits per year.  I don’t think markets can take markets can take much more of it.  I think you’re seeing the reaction to it right now.”

He added a concise review of last night’s Democrat primary debate between Hillary Clinton and Bernie Sanders: “I could only watch like ten minutes of that debate last night before I upchucked my dinner.”  

“I can not believe that anyone in their right minds can listen to two people that think every successful person in this country, that worked their arses off to be great and be wealthy, are criminals and crooks, and should have handcuffs on, when they have been the greatest salvation of this country in creating jobs, and creating wealth, and creating greatness,” he said of the Democrat debate.  “To watch this guy Bernie Sanders do what he does, talking about policies that they’re doing in Venezuela right now, that destroyed the country, and he actually gets applause… I don’t know how the hell we got here, but we gotta get out of it, or else.”

Kaltbaum hoped for a Republican escape plan from Democrat fiscal collapse that would include a clear explanation of how we reached this moment, with an unsparing account of how politicians from both parties took the American economy off-course.  “We need somebody to say that our government has doubled in size in 16 years, and we’re not getting double for our money.”

He also hoped a fiscally conservative leader would explain that the money for this bloated and inefficient government was coming out of the real economy, killing the goose that lays the golden eggs needed for all the 24-karat welfare omelettes the Democrat candidates are promising.

If he were a presidential candidate himself, Kaltbaum said he would declare his intention to “set the stage, set the conditions for everybody to flourish.”  That can only be done by backing away from “massive government spending, massive government programs, massive government giveaways,” and simplifying the tax code to remove 75,000 pages of deliberate obstacles to progress.

He said only such a dramatic pro-growth agenda could reassure nervous markets.  “Remember, a lot about the economy, and a lot about the market, is the one-word intangible called confidence,” Kaltbaum explained.  “You get somebody up there that starts talking that way, and means it, and you will see markets and the economy react so much better… because people will feel so much better, knowing they will have no more headwinds, but tailwinds to move things forward.”

He credited Donald Trump, Marco Rubio, and Ted Cruz with offering a little of this confidence agenda, but said “nobody has really punched the wall with their hand and started bleeding, to let people know this is where we’re going, in a very, very big way.”


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