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Meet Your New Monetary Overlord, Janet Yellen

So, Janet Yellen is going to be the new Fed Chief.  I already outlined some thoughts on this previously but given the news it’s worth repeating.  She’s actually very similar to  Ben Bernanke without the amazing beard.  I wouldn’t expect any mind blowing changes in policy from her:

  • She’s a fan of clear and concise communication with the market just like Ben Bernanke.
  • Forward guidance is a good thing and should be used effectively and often to communicate the Fed’s outlook and potential policies.
  • She’s in favor of tougher regulations.
  • She’s not much of a believer in the idea of “too big to fail” and would not move to break up big banks.
  • She has a strong forecasting record according to the WSJ.
  • She’s currently a dove, which means she’s very concerned with the employment picture (more so than the inflation picture).
  • She thinks the current unemployment rate is an enormous burden on the US economy.
  • She thinks QE has been “reasonably efficacious in stimulating spending.”
  • She is a fan of QE’s wealth effect via higher stock prices and house prices.
  • She would not be in favor of tightening policy unless growth picks up while employment measures improve.
  • She thinks the recent improvement as evidenced by the payrolls reports and unemployment date are insufficient measures of labor market health.
  • Her resume is kind of absurd – Brown undergrad, Yale PhD (under mentor James Tobin), 5 years teaching econ at Harvard, 2 years as staff economist at the Fed, married to Nobel Prize winner George Akerlof, 2 years at London School of Econ, Chaired the Council of Economic Advisors under President Clinton, President of the SF Fed for 6 years, Vice Chair of the Fed System under Bernanke.
  • She’s a Democrat.
  • She’s female, which, given the amount of testosterone running (ruining?) Washington these days, might be a nice thing.

 

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