October 09, 2013
Yellen it is
I applaud President Obama for choosing the best person to be the next chair of the Federal Reserve. And I thank Governor Yellen for her willingness to serve the country.
Posted by James Hamilton at October 9, 2013 05:48 AMdigg this | reddit
It is great to slowly see more Women, who are more than capable, in high profile roles. Of course there is still a huge imbalance with a nigh impenetrable glass ceiling but every capable high profile Woman helps create more opportunities for the poorly represented 51% of the population. It goes without saying that Janet is well qualified.
Posted by: Jeremy at October 9, 2013 06:35 AM
A good pick. I don't know her personally, but I've heard her speak many times and know people who do know her. She listens to all sides of an argument, weighs the evidence, and truly strives to do what's best.
Posted by: Brian at October 9, 2013 06:52 AM
That was decided already a long time ago. Yes, James, I told you so.
Easy money, Dow is a bit higher. Tapering starts in January, somekind of greenback swap around (?).
Posted by: Johannes at October 9, 2013 07:56 AM
Janet Yellen is a GREAT pick. somebody who is not an ideologue, analyzes the data and takes action only after discussion. not a cowboy who knows the answer before the problem even arises. this will be an strong, steady, intelligent hand to guide us through what could be very treacherous waters in the next couple of years. Bravo Janet!
Posted by: stryker is baffling at October 9, 2013 08:09 AM
Let me add my second to Jim's support for President Obama's nomination of Janet Yellen for Fed Chair. She is the right person to lead the Fed in these times. My hope is the Senate will recognize this, and speedily confirm her selection.
Posted by: Menzie Chinn at October 9, 2013 08:37 AM
This inbreeding will further extend the disembowelment of the American economy…
A special announcement from the Keynesian For Growth and Prospect Club, a ballroom dance will be held next Saturday in the honor of Ms Yell-on..Drinks are on the (federal) house!
No QE is required for admission…
Posted by: Hans at October 9, 2013 09:08 AM
The great American epic of buffoonery continues.
Posted by: Hans at October 9, 2013 09:54 AM
I looked back over the previous FED Chairs to see who Janet Yellen would most resemble and I was struck with what failures most of the FED Chairs were. Books have been written on how ineffective the early chairmen were compared to Benjamin Strong and then many blame the FED for the depth and length of the Great Depression. Thomas McCabe under Harry Truman might be the best simply because he is virtually unknown. Even Wikipedia doesn’t mention his tenure as FED Chair in his bio. The best FED Chair is the one you never hear about because that means he is doing his job.
But the period after WWII was filled with failed Chairmen. Martin engineered enough inflation during Bretton Woods to cause the French to demanded to exchange their dollars for gold and ultimately created the monetary condition where Nixon took us off of the gold standard. Burns was the most political, acting against what he knew was best to please Nixon’s political aspirations. Miller under Carter was totally lost and destructive, double digit inflation, interest rates, and unemployment.
Not until Volker did a FED Chair actually take his job of a stable currency seriously, yet even Volker failed because he attempted to use mechanical monetarism and by doing so created the recession of the early 1980s. Greenspan started bad, then watching gold he generated a stable currency for many years and as the Republicans congress cut spending the economy went though a strong period of prosperity, but then Greenspan's fame went to his head and he followed his gut, the Greenspan standard, ending his tenure with a crashing dollar and a looming Great Recession. Then “Helicopter” Ben Bernanke, what more needs to be said.
So in this not so august group where does Yellen fall? Clearly she fits well in the ranks of Arthur Burns and William Miller. Can you say stagflation? But to be fair a FED Chair cannot actually create a good economy. The best they can do is stabilize the currency to reduce business uncertainty. But a FED Chair can do enormous harm by creating uncertainty.
Here is hoping Yellen comes closer to McCabe slipping into successful obscurity – chances are slim to none. Being “the most powerful person in the world” is simply too seductive for a FED Chair to be good.
Posted by: Ricardo at October 9, 2013 11:33 AM
The newly nominated Fed Chairperson works for the owners of the largest Fed member banks that in turn own the Fed. Why should one congratulate her for being appointed head of an institution with the principal objective being to provide legitimacy and to run political cover for Wall St. and the largest banks' license to steal?
Posted by: Bruce at October 9, 2013 11:35 AM
I also fully second Jim's pleasure at this appointment and praise of Janet Yellen. She is truly superb.
To Ricardo two things, one about policy, the other about personality. On policy, please keep in mind that she was the person who convinced Greenspan to accept the 22% inflation target. On personality, it may take a woman with great common sense and self-humor (see her high school interview of herself linked to on Marginal Revolution) to resist the egomaniacal allure of being such a powerful person. She is the right person at the right place and time to deal with these "interesting times" as the old Chinese curse describes them.
Posted by: Barkley Rosser at October 9, 2013 12:33 PM
Oooops! That should have read "2% inflation target" not 22%. Duuuh.
Posted by: Barkley Rosser at October 9, 2013 02:16 PM
Ricardo Greenspan started bad, then watching gold he generated a stable currency for many years and as the Republicans congress cut spending...
Really? Are you having a senior moment? Remembering the 80s the way you wish they had been rather than the way they actually were? Try checking out the numbers (after the BEA site comes back to life). Federal government consumption and investment spending increased in the 1980s under Reagan. And a little political history as well. The Democrats held the House throughout the 1980s. The Republicans controlled the Senate from 1981 until 1987. Another little factoid. If you add up all of the budgets that Reagan submitted and add up all of the Democratic budgets proposed during that same timeframe, it turns out that Reagan proposed $11B more in spending.
Posted by: 2slugbaits at October 9, 2013 02:38 PM
Sir you are correct. Reagan went crazy on defense spending. I agree that the house did a good job tempering the runaway Reagan budgets/expenditures.
For those interested, I recommend "The Great Deformation" by Stockman. He calls a spade a spade. It is unfortunate but stupidity does not know the difference between Democrat or Republican... It runs in large amounts in BOTH camps!
Perhaps the gridlocked democratic system is not so bad after all. Now if we could only get rid of all the waste.....
Posted by: Jeremy at October 9, 2013 07:00 PM
You are a laugh a minute.
Reagan served through 1988. He nominated Greenspan who was confirmed in late 1987. So your obsession with Reagan is misplaced. But your error is not my point.
In October of 1987 Greenspan gave an interview to Fortune Magazine where he said that the dollar had to fall by 2%. Then James Baker began to bash Germany for raising its interest rates essentially repudiating the Louvre Accord. This one-two punch told the market that the fight against inflation, that pulled us back from the 1970s hyper-inflation, was over and easy money was on the way. Monday, October 19, 1987 stock markets over the whole world crashed.
This was a direct result of that words of the new FED Chair and the US Treasury Secretary. Greenspan learned a brutal lesson and never gave another interview like this agian while FED Chair.
So perhaps you just made a mistake connecting Greenspan with Ronald Reagan. Greenspan's most succcessful years were under Bush and Clinton. In 1997 when asked what he watched to keep the dollar stable Greenspan told Reuters "money supply" and "gold." The problem is that Greenspan only followed gold when it signaled inflation. He totally missed the deflation of the late 1990s and pulled us into the recession of 2000-1.
Posted by: Ricardo at October 10, 2013 08:20 AM
Reagan did not go "crazy on defense spending." The constitutional role of the government is to protect the people. That is why government is given such great power. Because of this great power a government must be constrained and limited.
But government is awful at providing goods and serices. Every time government attempts to make such provision it always fails to provide quality at the lowest price. Government is very good when it is restricted to those things it does best. It is awful when it attempts to step beyond its optimal role.
When government does this it always becomes obvious and so those who are wedded to the accumulation of this power always create barriers and wedges to prevent the private sector from competing equally. That is the abuse of power by government.
But what you must notice in this discussion is that the amount of money spent is not the important consideration. Properly functioning government is. Only the Keynesians, demand side analysts, measure effectiveness in how much is spent. Supply side analysts evaluate based on effectiveness. When you evaluate based on spending without reference to goods and services rendered you in the ignorant world of demand side thinking.
Posted by: Ricardo at October 10, 2013 08:30 AM
Janet Yellen is a great choice. Great credit to James Hamilton for beating the drum for her.
Posted by: Alexander Hamilton at October 10, 2013 11:16 AM
Please, gents. The Fed Chair does the bidding of the TBTE banksters and Wall St. who hire him or her.
The extent of the Fed Chair's autonomy or capacity to act unilaterally is limited to choosing the color of the office wallpaper and what to have for lunch at the Fed cafeteria.
The Fed follows the reserve needs (or not) of the largest TBTE banks. The banks tell the Fed what they need and what to do, and the Fedsters do it.
It is astounding that seemingly the majority of observers assume (or are paid to perpetuate the narrative) that the Fed Chair is somehow singularly powerful without having the power conferred by the owners for whom the Fed Chair works.
What Dimon and Blankfein's bosses want from the Fed and DC, they get. Let's cease with this childish demi-god worship of bankster-anointed political hacks who run cover for the TBTE banks' criminal syndicate.
Posted by: Bruce at October 10, 2013 11:51 AM
Ricardo You obviously missed my point, so I'll try again. You said that the Republican Congress cut federal spending in the 1980s. Go reread what you wrote and what I highlighted. That statement is false on two counts. First, spending went up, not down. And second, the GOP did not control Congress in the 1980s. The GOP only controlled the Senate during Reagan's first six years. For most of the 1980s Congress was split.
Search as hard as you like in my comment. Nowhere will you find me saying anything about Greenspan, good or bad.
Posted by: 2slugbaits at October 10, 2013 02:38 PM
Over the last few years, the Federal Reserve has more than tripled the monetary base. Is anyone concerned?
Posted by: Anonymous at October 11, 2013 09:32 AM
I think she's an abysmal ideologue who has spent way too much effort implausibly denying the structural nature of unemployment and slow growth. But she is at least not Summers.
Posted by: Tom at October 12, 2013 07:23 PM