- Yesterday, the Senate confirmed Janet Yellen as Ben Bernanke's replacement as the head of the Federal Reserve, with a vote of 56-25-a lackluster show of support that beat Bernanke's former distinction as the most-opposed Fed chair in history.
- The vote could have been even closer if not for the Polar Vortex.
- Yellen's predecessor gave her some job advice in a press conference last month: "Congress is our boss," which translates roughly to "Have fun storming the castle."
- She is the first woman to head the 100-year-old institution, and she definitely isn't inheriting the healthiest of economies.
- Unemployment is high, the government keeps cutting spending, preventing a much needed infusion of cash from hitting the economy, and the Federal Reserve has to figure out when the wisest time is to change up the emergency measures first pursued when the recession hit ... or perhaps have, as some fear, our fragile budding growth combust in their hands.
- Dealing with quantative easing definitely won't be easy. "The Fed will need to be careful in navigating the wind-down of its bond purchases. If it moves too fast, it could spook financial markets, sending stock prices plunging and interest rates rising. If it acts too slowly, it could run the risk of creating asset bubbles in areas of the economy from stocks to real estate."
- The biggest question facing her, according to Neil Irwin, is "Do we use the tools in our arsenal, even aware of the risks? Or do we allow growth to underperform its potential, leaving millions of jobless by the wayside when we may just be able to help, out of fear of some theoretical risks of a new credit bubble and ensuing crisis."
- But, as people have been speculating for months, she's probably got this. In July, Alan Blinder said, "Ms. Yellen's is one of consistently good judgment, time after time-exactly what we need in a Federal Reserve chairman."
- James Hamilton said in August, "She has a very impressive intellect but does not feel a need to show it off. Instead, she has an amazing knack for always asking the right questions. If someone disagrees with her, her first instinct is to try to understand why they have reached a conclusion different from her own. For this reason, Ms Yellen is one of the people I would most trust to find out what the key problems are and what needs to be done in any new situation."
- John Williams, Yellen's successor at the San Francisco Fed, concurs, "Janet was very much a person who asks very probing questions, wants to understand kind of what's below the conclusions."
- If you want to do a real deep dive into her career, here are 17 (!) papers she wrote that you could study up on.
- National Journal's forecast for her tenure? "According to more than a half-dozen longtime friends and colleagues, she has two grand passions that will require government to help in a very big way: reducing chronically high unemployment-which is the focus of her life's work and is probably the single biggest economic problem in America today-and reining [sic] in Wall Street's excesses."
- Yup, banking reform might finally be on the federal government's docket.
Daily Meme: Foretelling Yellen
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