Just in case you were wondering, everybody who’s anybody agrees that Janet Yellen’s done a great job as Fed Chair.
The editorial board of USAToday, for example opined yesterday:
There is no reason not to reappoint Yellen, the first woman to hold the post. She is a capable and well-respected chairman who gained valuable experience as a Fed governor during the 2008 financial crisis. As chairman, she has ably begun the process of unwinding the policies that kept the economy from sinking too far into the abyss.
The USAToday editors don’t say, exactly how Yellen has “ably begun the process” of unwinding the Fed’s massive balance sheet, probably because there’s nothing to talk about. Yellen has not actually done much of anything on this, other than say the Fed will do something. The entire process smacks of what has been Yellen’s M.O. her entire tenure: talking a lot about doing things, but when it comes down to it, do pretty much nothing. Taking nine years (four of them as Fed Chair) to advocate for an increase the Fed’s target rate by one percent, for example, counts as doing “pretty much nothing.”
So, the USAToday’s prime reason for re-appointing Yellen is based on things she’s said. Not any policy change to the status quo she’s actually supported and carried through to execution. She’s just Bernanke II.
CNN, meanwhile declares ”We’ve found Trump’s perfect pick for Fed chair: Janet Yellen.” In this case, too, Janet Yellen should be applauded because, well, she hasn’t done anything. “The Federal Reserve chief’s promise not to remove the easy-money punch bowl too quickly has helped keep the party on Wall Street going.”
It’s important to keep asset price inflation goin upward, you see, because that’s good for Wall Street. It’s bad for regular people, of course, but they don’t matter.
So, let’s keep Yellen and her punchbowl at the party because we know she won’t do anything to upset Wall Street.
What an amazing resume Yellen has!
Basically, all it takes to be a brilliant Fed chair is to inherit a Fed devoted to massive monetary stimulus from Ben Bernanke, and then basically do nothing to upset the apple cart, all the while promising to “normalize” matters some day.
In all cases, the narrative continues that the US economy is “humming” and everything’s great. How great? Well, not great enough to actually raise the target rate or sell off a meaningful amount of the Fed’s balance sheet. Doing that might destroy the economy. But things are great! Trust us.
Not everyone’s pleased with the current situation, though. The Guardian, which is always a good place to get a hyper interventionist view of things, wants to end this ultra-conservative Fed we have, and instead remake it into a “nimble and innovative crisis management agency, with immense powers in times of financial crisis to stem the tide in a way that legislatures cannot.”
In other words, the Fed isn’t nearly activist enough, and when the next crisis comes, the Fed’s going to need even more power to act as “the financial equivalent of firefighters in the face of a blaze.” In other words, this Fed needs to be ready to do “whatever it takes” at all times without any pesky intervention from democratic institutions.
Best of all, this new Fed would be unrestrained by laws of economics:
It would smaller, smarter and less bound by outmoded “laws” of economics and more driven by the very pragmatism and innovation it displayed to great effect in 2008-2009.
