It’s official: President Obama has nominated Janet Yellen to become the next Chairman of the Federal Reserve. It’s likely that her nomination will not be opposed and if confirmed by the Senate then she will be the first woman to head the central bank in its 100-year history.
Many have applauded the president’s decision, especially after there were reports that former Treasury Secretary Larry Summers was the frontrunner until he announced his withdrawal from Fed Chair consideration. Should economists be celebrating Wednesday’s announcement? If you’re of the Austrian School then definitely not.
Yellen is expected to continue and perhaps even expand the present inflationary policies of current Fed Chair Ben Bernanke when he steps down on Jan. 31, 2014. Since she has been supported by economists and public officials calling for more job creation by the Fed, it is likely that Yellen will persist in the $85 billion monthly bond-buying initiative.
Indeed, Yellen does come from the Keynesian school of economics as well as the Yale School theory: printing money forever creates jobs. In her brief comments, she noted that the economy and the financial system have been improving since the Federal Reserve stepped in following the economic collapse.
“The past six years have been tumultuous for the economy and challenging for many Americans,” said Yellen in an official statement. “While I think we all agree, Mr. President, that more needs to be done to strengthen this recovery, particularly for those hardest hit by the Great Recession, we have made progress. The economy is stronger and the financial system sounder. As you said, Mr. President, considerable credit for that goes to Chairman Bernanke for his wise, courageous, and skillful leadership. It has been my privilege to serve with him and learn from him.”
After commending Bernanke for his “wise, courageous and skillful leadership,” it should completely expel her from leading the United States central bank.
Here are some interesting facts about Yellen:
– She believes inflation is good for employment
– Didn’t foresee the Great Recession (see more here)
– One of the leaders of the housing bubble
– A staunch critic of former Fed Chair Alan Greenspan
– Agrees that the real unemployment rate is higher than stated