President-Elect Joe Biden – as declared by the corporate media – is picking his cabinet even though he hasn’t officially been elected president yet.

For the sake of discussion, let’s assume that Joe Biden actually takes office on January 20, 2021. Let’s also assume that he officially nominates Janet Yellen as the next Treasury Secretary as he has indicated. Let’s also assume that she is confirmed by the Senate.

Janet Yellen would become the first female Treasury Secretary.  She wouldn’t be the first Keynesian though.

Yellen already has the distinction of being the first female chair of the Federal Reserve.  She was nominated by Obama and was in that position from 2014 to 2018.

Yellen is known as an inflation dove.  In other words, she is more than happy to see the central bank create more money out of thin air to pay for things that politicians and taxpayers are not willing to pay for directly through tax collections.

However, when you look at Yellen’s record as Fed chair, she had the tightest monetary policy of any Fed chair since Paul Volcker if you use the Fed’s balance sheet as the measure.

The Fed’s target federal funds rate was already near zero when Yellen entered office, and while it stayed low, she did start the process of raising it.  Yellen oversaw the winding down of the last round of quantitative easing (QE 3) from the 2008 financial crisis.  For her remaining time in office, the base money supply was tight or perhaps even slightly deflationary.  In other words, her actions didn’t fit with her reputation.

It is important to acknowledge that there were also no economic or financial crises that occurred on her watch.  If she had been Fed chair in late 2008 or in March 2020, then I’m sure the story would be different.

What does this tell you?  It tells you that Yellen is going to go along with whatever the establishment is doing.  She will be accommodative when accommodation is necessary.

Yellen is an intelligent person despite being a Keynesian in economics.  She has some practice taking questions as Fed chair.  She is fairly well spoken.  In this sense, it makes her somewhat dangerous.

However, I also believe that libertarians and conservatives should not overplay their hands in criticizing Yellen.  Despite some rhetoric in her distant past, she is rather conventional. She isn’t going to be enacting the policies of Alexandria Ocasio-Cortez unless that is the way the general establishment is headed.

Yellen is not an outright socialist.  She isn’t even Bernie Sanders.  She understands some economics, even if some of it is wrong.  She also gets some things right.  I think she understands that the Fed can’t just create money with total recklessness without there being some bad consequences.  Just the same, she understands that the federal government can’t run multi-trillion dollar deficits forever without there being bad consequences.

I was a little bit surprised at Biden picking Yellen for this position.  But it isn’t earth-shattering news because Yellen is going to oversee the Treasury department similarly to some other establishment Keynesian.

It’s certainly not good news, but it also isn’t horrible.  You can already see the way Biden is going to govern.  It will be establishment politics.  It will be a return to the status quo of early 2016 to the degree that anything deviated from that.  The deviation was mostly in rhetoric.  In terms of government spending, there has been no deviation except even more spending in 2020.

If banks or certain favored corporations get into trouble, we should expect more bailouts.  We should expect more spending on unemployment and perhaps stimulus checks.  We should expect proposals for small marginal tax hikes on high-income earners.

I am less certain about corporate taxes.  It is hard to imagine that Biden, or even Harris, would try to hike corporate taxes if the economy is still slumping.  This would be true even if the Democrats take control of the Senate.

The problem is that the economy is in major trouble right now.  We live in a tale of two worlds.  I saw this on Thanksgiving on television with scenes of long food lines.  There were cars stretched for miles.  But when I went out on Friday afternoon, the mall was packed.  I wasn’t shopping, but I was going out for dinner.  This was in Florida, which is more open than most other states, but it is indicative that many families are still doing rather well.

The stock market has done amazingly well.  I think it is a giant bubble.  The most amazing thing is that it is hitting new all-time highs in late 2020, even as new lockdowns and restrictions are imposed across the country.

Gold took a bit of a hit in November, but it is still much higher than it was this time last year. With Yellen looking likely as the next Treasury Secretary, I continue to be bullish on gold in the long term.

Assuming Trump leaves office, we may start to get a little pushback from Republicans in Congress on the budget.  However, even if there is a small scaling back from where we are, the government is still going to be running massive deficits.  If there is a stock market crash and a rise in unemployment again, then we will see even bigger deficits again.  Most of this will be paid for by the Federal Reserve buying debt with newly created money.

There aren’t a lot of certainties in life, but there are a few.  The sun will rise in the east.  Hillary Clinton will never be a libertarian.  And the Fed isn’t going to significantly reduce its balance sheet any time soon.  This is why gold is still a good bet, with or without Janet Yellen.

Yellen won’t be any more of a disaster than anyone else would have been under a Biden presidency, but she’ll still be a disaster.  Reckless government spending will continue.