Job Creators Network (JCN) President and CEO Alfredo Ortiz told Breitbart News that it is now incumbent on Congress to combat inflation by halting spending as the Federal Reserve is likely to put the brakes on rate hikes following the Silicon Valley Bank (SVB) collapse.
“So it’s obviously a challenge with the SVB, and the question in terms of what can the Fed continue to do to battle inflation in the context of what’s happened,” Ortiz said during an exclusive telephone interview Friday.
He added it would “be a tough one for the Fed” as he believes it can only take rates up another quarter of a percent “at most” as the threat of more bank failures looms with additional hikes.
“They’re somewhat limited because if they keep on trying to raise interest rates to battle inflation, there are going to be more and more banks affected by the same spread issue that happened with SVB,” Ortiz said.
The Hill noted 93 percent of the deposits at the bank were not insured by the Federal Deposit Insurance Corporation [FDIC] which makes SVB a unique case, as Ortiz said.
“SVB, though, I think, was a particular case because if you look at their deposit, for example, what percentage of deposits were actually insured, FDIC insured deposits or not, it was actually the complete inverse of what the industry standard is. The industry standard is roughly about ten percent of deposits not covered by FDIC,” he continued. “So most people have balances below $250,000. At SVB, it was actually completely the opposite.”
“So when you heard people saying over the weekend, ‘Oh, these mom and pops, small businesses, are gonna be having a tough time making payroll’ and all the stuff, they weren’t small mom and pop,” he said. “I mean, we’re talking Etsy, Pinterest – these are some pretty big companies actually that bank with SVB, so it was in of itself a particular isolated case.”
“Are there other banks out there that, you know, First Republic, for example, which is a regional bank – I mean, I think it had a little bit more exposure than most – but in general, I think the regional banks didn’t have that same kind of portfolio that most of these other banks did,” continued Ortiz. “I mean, they went really long out their bonds, so when there was basically a run on the bank, they just didn’t have the liquidity to meet it.”
He added that the Federal Reserve’s balance sheet is comparable to what it was in November, “so they’re actually flooding the market, again, with liquidity,” which “in and of itself is inflationary.”
“The reason why this really does shift to Congress… is because now Congress really has to be very disciplined and not pass these multitrillion-dollar budgets that Biden wants to pass as he presented in his ridiculous spending plans. I mean, those are going to be even more inflationary on top of inflationary activity that’s already going on,” Ortiz explained. “And that could be just a spiral that you can’t control because then the Fed can’t take more interest rate hikes, then inflation is going to keep on creeping up.”
“So the only way that we can really stop this is really by stopping the spending in Congress, stopping spending in D.C. There is no room for the type of spending plans that Biden’s put forth,” he continued. “And, you know, tax increases on small businesses, for example, its the worst time that that can happen. So we need to put together, I think, smart fiscal, pro-growth… plans in place that really do promote growth, rather than just social welfare.”
As the U.S. Treasury is taking “extraordinary measures” to keep the United States from defaulting on its $31.3 trillion debt, House Republicans are looking for spending cuts in exchange for help in raising the debt ceiling.
House Speaker Kevin McCarthy told Breitbart News Washington Bureau Chief Matthew Boyle in an exclusive long-form interview several weeks ago that Republicans would not lift the ceiling without spending cuts and that the tax hikes Biden seeks are out of the question. McCarthy, who has been adamant that House Republcians would not cut Medicare or Social Security, was unspecific about where Republcians would seek to curb spending.
Ortiz also pointed to the JCN’s Small Business Prosperity Plan as a mechanism to help stymie inflation. The plan includes eight points:
- Make the tax cuts and jobs act permanent
- Unleash domestic energy production
- Healthcare reform to benefit small businesses and families
- Exempt small businesses from new regulations
- Rein-in government spending to combat high inflation
- Expand access to capital for small businesses
- Dignity of work requirement for recipients of government assistance
- Get tough on china and unclog obstructed supply chains
McCarthy has endorsed the vision, noting that its “commonsense provisions… can help bring small businesses back.”
“I think it’s clear during COVID that small businesses were the engine of our economy, and when that all got hit, we saw what happened, so we got to make sure that to have a robust economy, we have a robust small business community,” Ortiz said Friday.
Breitbart News also asked the JCN CEO for his interpretation of the Federal Reserve stating it needs to soften the labor market to combat inflation.
“Well, you know, they have unemployment targets,” he explained. “I think if I’m interpreting what they say is that there, they need to allow unemployment to creep up a little bit more because we’re almost at effectively when you’re talking 3.5% – 3.6%, I mean, that’s, that’s pretty darn low. So I think we need to allow that to go up somewhat to be able to battle inflation.”