November 25, 2020

Janet Yellen

“President-elect Joe Biden is expected to nominate former Federal Reserve Chair Janet Yellen as U.S. Treasury secretary.” Reuters

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From the Left

The left praises Yellen.

“As Fed chair, Yellen oversaw the continued recovery from the Great Recession and left behind a solid legacy. Unemployment steadily declined, the stock market climbed, and inflation stayed low under her tenure. Part of the strong economy Trump inherited can be traced back to Yellen. That’s not to say Yellen’s time at the Fed was perfect…

“As Sam Bell outlined in Politico in 2018, some people say that she was ‘too sanguine’ about the potential for using regulations to stave off the next financial crisis, that she went too easy on Wells Fargo in the wake of its fake accounts scandal, or that she didn’t do enough to help smaller banks. ‘And yet on the critical issue at hand in her 2014 nomination — could we bring more unemployed workers back into the labor force without blowing things up for everyone? — she has been unquestionably vindicated,’ Bell wrote.”
Emily Stewart, Vox

“As Fed chief, Yellen ignored inflation hawks who (incorrectly, in hindsight) pushed her to rapidly raise interest rates. Instead, she patiently waited to hike rates to allow more time for the economy to heal from the Great Recession and boost employment. With interest rates at zero, the Fed has limited power today to further bolster the economy and address inequality. But at Treasury, Yellen could quarterback fiscal policy at a time when it's the only game in town… [A] challenge for Yellen, who is known as a brilliant academic, would be adopting to a more partisan role. At the Fed, Yellen prided herself on staying above the political fray and sticking to the economic arguments.”
Matt Egan, CNN

“Her constant questioning of whether economic models and forecasts are correct helped her become one of the first policymakers to foresee the 2008 financial crisis and the deep problems in the housing market…

“After an early stumble as Fed chair where Yellen misspoke and the stock market tanked, she garnered a reputation for being the most prepared in the room. She carried a thick binder of notes to news conferences, and she constructed her own dashboard of indicators to better understand the true health of the economy… Those who have known Yellen for years say that alongside her expertise, her greatest skill is her ability to build consensus. Republicans and Democrats remain deeply divided about how best to help the economy. Yellen might be able to broker a deal — and work hand-in-hand with the Fed on aid.”
Heather Long, Washington Post

“[Yellen’s nomination] suggests that the Biden administration wants a Treasury that works hand in glove with the Fed to bring the U.S. economy back to where it was before the coronavirus pandemic… A more pessimistic view is that the plan to nominate Yellen could be taken as an early signal that Biden doesn’t expect much cooperation on his economic agenda from what could be a Republican-controlled Senate.”
Brian Chappatta, Bloomberg

“For his entire career, the president-elect has located the center of the party and planted himself there. Biden’s platform was more progressive than those of either Hillary Clinton or Barack Obama, because the party moved left and he moved with it. You can see that reflected in his picks as well: They’re essentially a collection of establishment figures who are progressive enough to avoid angering many on the left — and might even appeal to them…

“Janet L. Yellen, who would become treasury secretary, is deeply qualified (she chaired President Bill Clinton’s Council of Economic Advisers and led the Federal Reserve). But she’s being praised by progressives as a sharp break with Obama’s first treasury secretary, Timothy Geithner, and for her commitment to fighting unemployment and inequality. That’s a reminder that many who worked for Obama are now regarded on the left as being too conservative, particularly those with Wall Street ties.”
Paul Waldman and Greg Sargent, Washington Post

From the Right

The right is relieved that Biden chose Yellen rather than a more partisan figure.

The right is relieved that Biden chose Yellen rather than a more partisan figure.

“[Yellen] believes in the Keynesian precept that federal spending spurs economic growth—the kind of spending matters less than the amount—and in recent months has called for much more in federal Covid-19 relief. This no doubt appeals to Mr. Biden, who is fond of the Obama spending spree of 2009-2010…

“Our guess is that Mr. Biden also values her ties to the Fed, which is expanding its policy writ to include vast new regulatory powers, as well as a larger role in fiscal policy and steering the allocation of private capital with its loans and bond purchases… Ms. Yellen worked with current Fed Chairman Jerome Powell during the Obama years, and they are likely to form a mind meld on fiscal and monetary policy. This will be good for Ms. Yellen’s policy influence, but the same can’t be said for Fed independence.”
Editorial Board, Wall Street Journal

Regarding the Fed’s actions this year and stock market highs, “The mispricing of risk that flows from artificially low interest rates is, in effect, leaving investors with very few places to go for return… it is hard to imagine that the current round of malinvestment — because artificially suppressed interest rates can only end in malinvestment — is going to end well…

“In 2007, Chuck Prince, then the CEO of Citigroup (in)famously commented that ‘as long as the music is playing, you’ve got to get up and dance.’ We all know what happened next. That said, it is reasonable to expect that Janet Yellen will neither close down the band any time soon, nor, to use an older analogy, will she take away the punchbowl. The market’s reaction to the prospect of her appointment makes sense for now…

“Yellen also has, to many investors, something else going for her: She is not Elizabeth Warren. Even though the chances of a Warren appointment were extremely remote — a Republican governor would have chosen her successor as senator — confirmation that she was not going to get the job must have come as something of a relief to the markets.”
Andrew Stuttaford, National Review

Janet Yellen is a known quantity — and a highly regarded one at that. By her actions, she has shown that she has a hard-headed appreciation of facts, data, economic realities, and their logical and consistent application…

“When it comes to economic policy, Yellen has shown that she believes strongly (some might feel too strongly) in the ability of the federal government, by way of fiscal, monetary, and regulatory policy, to spur economic activity. She also believes that while there are always special cases that need to be considered, the nation is best served when trade is open rather than closed. She believes that long periods of deficit spending may be tolerated when unemployment is high and interest rates are low, but that in the long run, a nation cannot sustain itself by just going deeper into debt… Biden should get high marks for his nomination.”
Bruce Yandle, Washington Examiner

“On the issue of our national debt, which has climbed to World War II-levels as a percentage of our GDP, Yellen will encourage Biden to put the breaks on potentially trillion-dollar spending packages with a negative return on investment. Although Yellen will certainly disappoint conservatives as to where she'd allow more deficit spending (she's previously cited climate change and education as investments worthy enough to fund), you're not likely to see her sign off on a Wall Street bailout…

“Biden was never going to pick anyone who could reasonably be called fiscally conservative. Considering that Warren was on the table, Yellen, who has called our debt ‘unsustainable’ and our monetary policy unfixed in the long run, is about as good as the Right and the markets could have hoped for.”
Tiana Lowe, Washington Examiner

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