Few people have done more to destroy the American middle class than Janet Yellen. Both in her former capacity as Federal Reserve chair and now as secretary of the Treasury, she has been woefully disconnected from everyday Americans and their current financial plight.
This arrogant detachment allowed her to recently declare that she sees no sign of a recession. Meanwhile, half of Americans feel like we’re already in one. That’s because their family finances have been devastated by the policies Yellen has helped to implement over the last 20 years, while she and her fellow elites have done quite well, being immune from the ramifications of their own actions.
The proof is in the numbers: While the top 20% of households still have about $500 billion of pandemic-era excess savings, everyone else has run out of money. The bottom 20% of households have not only depleted their excess savings, but also their savings that existed before the pandemic. Now, many American homes are falling into debt.
Credit card debt in particular has exploded over the last three years, hitting $1 trillion for the first time as over 60% of families live paycheck to paycheck and accumulate debt to make ends meet. Worre still, this is happening as credit card interest rates hit record highs – burying families under financing charges that are growing faster than many can afford to pay.
All this is a consequence of 40-year-high inflation, brought on by the government’s spending, borrowing and printing too much money. Yellen played a key role in all three steps, both through advocacy and actual implementation.
During the Obama administration, Yellen had no problem participating in this downward spiral of federal finance. As president of the Federal Reserve Bank of San Fransisco, vice chair of the Federal Reserve Board of Governors, and then chair of the Federal Reserve, she advocated for artificially low interest rates and excessive government spending.
And despite speaking up during the Trump administration about the unsustainability of government spending, the first second she was Treasury secretary in the Biden administration and had a public platform, she changed her tune and again advocated for unprecedentedly large federal budgets.
While inflation was destroying American’s livelihoods, Yellen assured the public throughout 2021 that it was only ‘transitory,’ which of course wasn’t true. But that didn’t stop inflation from robbing people of their earnings and savings.
Many hardworking Americans who were hoping to retire, for instance, have been forced to delay their retirement for years while they struggle to save enough to cover the higher cost of living under Bidenomics.
The children of those would-be retirees are also struggling. With inflation-adjusted weekly earnings dropping almost 5% under the Biden administration and interest rates rising at the fastest pace in decades, young families have seen borrowing costs increase dramatically.
For example, the monthly mortgage payment on a median price home is now more than twice what it was when President Biden took office. That means effectively paying an extra $13,000 per year for the same house than you would have just a few years ago.
And that means families are increasingly having to rent. While Yellen and her husband enjoy their $4.3 million real estate portfolio, most folks can no longer afford the American dream of homeownership. Unfortunately, this increased demand has driven rents to new record highs.
Yet, even as the middle class are clearly being crushed, Yellen continues advocating for more taxes and spending, burdensome financial regulations, and the constant printing of money to pay for it all. She promotes, in other words, the burgeoning federal budget at the expense of the family budget, and still has the gall to say that ‘everything is fine.’
Perhaps that’s because she and the rest of the ruling class are doing just fine themselves. But ‘let them eat cake’ is no answer for a hungry people. And no amount of decadence and ignorance will change the fact that the engine of the American economy is the middle class. When it stalls out, Yellen’s condescending world view will be exposed for the sham it is.
E. J. Antoni is a public finance economist at The Heritage Foundation.
