Louisiana Senator Compares Modern Banks to ‘Sophisticated Ponzi Schemes’
Louisiana Republican senator John Kennedy recently stated in an interview published on Wednesday that the U.S. Federal Reserve may need to increase the federal funds rate to 8-10% to address the country’s inflationary pressures. Kennedy’s remarks come after he criticized the Biden administration in mid-March for bailing out Silicon Valley Bank and Signature Bank, emphasizing that the decision to make all depositors whole “was a bail out,” regardless of what it was called.
Senator John Kennedy: ‘Powell’s Gonna Have to Raise Rates Much Higher Than He Normally’
During a recent interview with CNBC, Louisiana Republican senator John Kennedy expressed his belief that the U.S. central bank will need to increase the benchmark bank rate from its current level of 5% to around 8-10% to combat inflation. Kennedy went on to state that Federal Reserve chairman Jerome Powell will have to raise rates much higher than usual if Congress does not slow down its stimulus spending.
On the same day that senator John Kennedy made his remarks, the U.S. Federal Reserve increased the benchmark bank rate by 25 basis points (bps), marking the tenth consecutive rate hike and bringing the rate to its highest level in approximately 16 years.
In addition to discussing inflation, Kennedy also addressed the issue of the debt ceiling, calling for president Biden to have a serious conversation with House speaker Kevin McCarthy (R-CA) about how to allocate resources and reduce inflation. According to Kennedy, it’s time for the leaders to have an “adult discussion” about this critical issue.
I don’t think you can do it without reducing the spending and debt.
Kennedy Compares Modern Financial Institutions to Pyramid Schemes
Senator John Kennedy also addressed concerns about the U.S. banking industry, warning that modern technology can quickly turn a small disturbance into a full-blown panic. According to Kennedy, banks today rely heavily on trust, and are far less fortified than they used to be. In fact, Kennedy went so far as to compare modern financial institutions to pyramid schemes, stating that they are essentially “sophisticated Ponzi schemes.”
“They’re really just … and don’t take this the wrong way … sophisticated Ponzi schemes,” Kennedy emphasized.
U.S. Treasury secretary Janet Yellen recently warned that the country could face a potential default on its debt limit in June, which could have dire economic and financial consequences. With the United States currently carrying a staggering $31 trillion in debt, the stakes are high.
However, Republicans are refusing to raise the debt ceiling unless certain mandates on green energy and climate change are repealed from the Inflation Reduction Act. Senator John Kennedy’s recent comments on the issue come on the heels of his criticism of president Biden’s handling of the collapse of Silicon Valley Bank and Signature Bank in mid-March.
What do you think about senator Kennedy’s comments? Do you agree or disagree with his assessment? Share your thoughts in the comments section below.