Janet Yellen: A True Public Servant

Janet Yellen ended her term as Chair of the Federal Reserve today.

Source: Federal Reserve

Source: @pcubab

Rather than add my own encomium, I’ll just quote Jim Hamilton’s impeccably-argued case for reappointing Dr. Yellen:

The economy and financial markets have performed very well while Yellen has been at the helm. To be sure, the Federal Reserve is just one factor in that, but a factor nonetheless. Unemployment has reached a 16-year low and stock prices made all-time highs. Monetary policy and financial markets are returning to normal and banks’ balance sheets are healthy. Markets have confidence in U.S. monetary policy, and so do I.

I’ll acknowledge that I might have done some things differently. I’ve favored a slower trajectory for hiking interest rates this year and next than the Fed has been following. But I have enough confidence in Yellen’s judgment to be convinced that if I’m right in that assessment, the Fed will slow the pace of hikes. And if instead the Fed keeps charging up, it’s probably because I was wrong and Yellen was right.

One reason I say that is because I am extremely impressed by the collective expertise of the staff of economists working for both the Federal Reserve Board in Washington DC as well as the many regional banks. The staff is very well informed, and the Federal Reserve is unique among all the institutions with which I am familiar in enabling the many individuals to work as a team to analyze everything that is going on. The Fed is not a top-down institution, where the boss gives the orders and everyone reluctantly follows. Instead, it’s a place where the key insights and information of different individuals can make their way up to the top. This is thanks in part to the style of leadership cultivated by Chair Bernanke and strengthened further by Chair Yellen. Both are solid, independent thinkers, capable of decisive action, but also very good listeners. These are the core attributes we need in a Federal Reserve chair.

The Nation is in her debt for masterfully steering the economy toward full employment, while implementing strong regulations necessary to prevent a repeat of past financial debacles.

47 thoughts on “Janet Yellen: A True Public Servant

  1. PeakTrader

    I think, Trump wanted to know if he could trust a Democrat, particularly in a powerful position in 2020. Why take an unnecessary risk? Democrats have not been kind to Trump – the dishonesty and unfairness are overwhelming.

  2. 2slugbaits

    Aside from the fact that Janet Yellen was an excellent Fed Head, her selection also gave us “Larry Summers Unchained” after he got passed over and was freed to speak his mind and explore interesting avenues of inquiry. The best of both worlds.

  3. rtd

    Definitely a huge asset to this country during her tenure at the SF Fed and the BOG. Let’s hope her predecessor has been taking notes.

      1. rtd

        Hahaha… I over-edited.
        I originally had a few lines about Powell but felt it better to keep this about Yellen.
        “let’s hope his predecessor left some notes”
        “let’s hope her predecessor has been taking notes”
        with the intent being
        “let’s hope she left her successor some notes”

        I feel we were about as fortunate as possible with the Bernanke/Yellen-era Fed and I’m just hopeful we can have some quality BOG appointees to assist Chair Powell with the intricacies of monetary policy. I don’t know if Trump will provide good appointees but I’m certain we will find out as I don’t think Trump will ignore the empty seats to the extent of his predecessor (although it would be disingenuous to not assign some blame to Senator Shelby and some of his colleagues.)

  4. Moses Herzog

    A class lady. It’s too bad the VSG doesn’t have ANY class, or she might have had as long a run as Greenspan, minus a similar ’07-’08 mess. For whatever it’s worth, I argued for her nomination over Larry Summers on blogs similar to this before she got the job. Jewish—and they tend to be a way smarter than average lot. Here is Chair Yellen’s interview that aired late Friday afternoon. One classy lady interviewing another classy lady:

    1. rtd

      Agreed. Maybe Menzie has a new year’s resolution to follow his colleague’s lead… although Menzie’s track record isn’t promising. I’m afraid he doesn’t have the adility/will. It’s sad as Menzie is so similar to his mortal enemy, POTUS Trump. It must suck to be so similar to the one individual you dispise the most. I truly feel badly for Menzie but it seems to be many of his colleagues don’t respect (acknowledge) his blogging.

  5. PeakTrader

    The Bernanke and Yellen Fed responded brilliantly to the housing bubble Congress created, that eventually collapsed the economy. However, appropriate monetary policy can only do so much. We need economists to take command of fiscal policy, and other major economic policies, to promote stronger growth.

    1. PeakTrader

      Although, the Bernanke Fed began easing the money supply in August and September ‘07, before the recession began in December ‘07, monetary policy was likely too restrictive leaving the Fed Funds Rate at 5 1/4% too long. It would’ve been better if Congress followed Bush’s recommendations in 2004 to regulate Fannie and Freddie, and raise lending standards in the housing market.

    2. pgl

      “The Bernanke and Yellen Fed responded brilliantly to the housing bubble Congress created”

      Ill advised deregulation of financial institutions was a dumb mistake that anyone who had learned the lessons of the past would have never made.

      1. PeakTrader

        It was more than that. Congress believed it could create a giant social program in the housing market without paying for it and replace the Nasdaq bubble with a housing bubble. If lending standards were gradually raised in the early 2000s, the financial crisis could’ve been averted.

        1. pgl

          “It was more than that. Congress believed it could create a giant social program in the housing market without paying for it”

          I might ask where on earth do you come up with this utter BS but then your 15 minutes of fame expired a long time ago. I would also ask you to cease with writing this unsupported nonsense but we all know it will continue with no bounds.

          1. PeakTrader

            Pgl, you should learn more than propaganda. Bloomberg – hardly a conservative and a billionaire – knows something about finance:

            Michael Bloomberg, former Mayor of New York City:

            “It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.

            Now, I’m not saying I’m sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn’t have gotten them without that.

            But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it’s one target, it’s easy to blame them and Congress certainly isn’t going to blame themselves.”

          2. PeakTrader

            Bush Administration Tried to Reform Freddie and Fannie Five Years Ago
            February 19, 2009

            “Fannie Mae and Freddie Mac “accelerated their imprudent behavior after we attempted to regulate them. They bought almost as much mortgage debt from 2005 through 2008 as they bought in their first 30 years of their existence.

            In 2003, when we sent our first members of the Cabinet up to talk about this on Capitol Hill, Barney Frank had a hearing in which they basically beat up everybody we sent up there in pretty vociferous language.

            In fact, we moved aggressively in 2004 to regulate Fannie and Freddie, actually got a bill through the Senate Banking and Finance Committee only to have it filibustered by [Sen.] Chris Dodd.”

          3. PeakTrader

            What Caused the Financial Crisis
            November 16, 2010

            “Starting in the late 1990s, the government, as a social policy to boost homeownership, required Fannie Mae and Freddie Mac to acquire increasing numbers of “affordable” housing loans. (An “affordable loan” is made to people who normally would not qualify.)”

          4. PeakTrader

            Paul Krugman – 2002

            “To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

          5. 2slugbaits

            pgl You have to understand that PeakTrader is a former banker and is quite defensive about the role that he played in the Great Recession. Never mind that the Fannie and Freddie stuff happened quite late in the day and long after the housing collapse was on its way. Never mind that mortgage originators were approving loans left and right. Never mind that credit rating agencies were thoroughly corrupt. Never mind that banks couldn’t be bothered with due diligence and just robo signed foreclosures even against people that owned their homes outright and didn’t have a mortgage. Never mind any of that. It’s all because back in 1979 that mean old Congress forced banks to make loans to poor minorities…the kinds of folks that PeakTrader can’t stand. But you can be sure that PeakTrader will link to some old and thoroughly discredited “study” that blames it all on bleeding heart liberals and tries to convince us that bankers were just innocent victims unfairly maligned by everyone.

        2. pgl

          “If lending standards were gradually raised in the early 2000s, the financial crisis could’ve been averted.”

          OK – if we had returned to some sensible regulations, this mess could have been averted. That is what I said!

          1. pgl

            A big thumbs up to 2slugbaits to rebutting the latest right wing spin from Peaky. I’ll just say it is gotten to be beyond absurd how he accuses the rest of us for being stupid as a prelude for his usual dumb rants.

          2. baffling

            Peaktrader is the local hack who refuses to acknowledge the role played by the financial industry in creating one of the biggest financial busts in history. He would rather blame the government. Look, peak was a lousy banker who has been unemployed since the financial crisis struck, and refuses to acknowledge his (and others) responsibility in the idiotic financial scheming that went on a decade ago. His excuse ultimately boils down to “the government made me do it”.

    3. Moses Herzog

      You know another name for “fiscal policy”?? Government spending. You REALLY are a F__ing moron aren’t you?? I bet you’d argue with yourself if someone switched the name on your comments in a thread.

      1. PeakTrader

        Moses, don’t know what happened to you to be so hateful. Fiscal policy is not another name for government spending. There’s contractionary and expansionary fiscal policy. Moreover, it’s changes in taxes and/or spending to influence demand. A budget deficit will raise demand – the amount depends on the tax multiplier or spending multiplier. Try to work on your ignorance, along with your manners.

        1. pgl

          Lord – please stop your insanity. BTW – you’re insisting the rest of us are stupid is really pathetic.

  6. 2slugbaits

    PeakTrader Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

    Ugh. You completely misunderstood Krugman’s point. He wasn’t making an argument for creating a housing bubble to replace the NASDAQ bubble. A lot of clueless people completely misunderstood Krugman’s point, much as they completely misunderstood the “alien invaders” parable. As he tried to explain to the slow learners, his point was that the Fed’s usual toolbox wasn’t up to the job. He wasn’t recommending a housing bubble; he was lamenting some sorry arithmetic for those who were counting on the Fed to stimulate growth. Sheesh. Your sense of context and understanding the English language is as bad as Rick Stryker’s.

      1. PeakTrader

        After the bubble burst, Krugman said:

        “It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.”

        Was it or was it not the appropriate policy? – was he for or against it? – sounds like doubletalk.

        I think, Krugman was correct. We needed a housing bubble in 2000-03, and then gradually raise lending standards to avoid the financial crisis in 2008. That’s where politician/lawyers, like Dodd and Frank, made their mistake.

      2. 2slugbaits

        PeakTrader Reread what you posted. Krugman was making my point. He was saying that creating bubbles seemed to be the only tool left in the Fed’s tool box. He was NOT saying that was a good option. Krugman was NOT recommending it. Anyone who was paying attention at the time should have known that Krugman was arguing for fiscal spending precisely because monetary policy was at a dead end and could only stimulate the economy by creating bubbles. It’s incredible that you don’t seem to understand the English language.

    1. pgl

      A lot of people love to take Krugman’s words out of context to spin their usual nonsense. Peaky is a dime a dozen.

    2. CoRev

      2slugs, plain language is always best. If the quote was out of context show the whole context. Otherwise you are again just throwing out 2slug’s speculation without evidence. We have too often seen your failed approach.

      Got your tax reform crumbs, yet? What’s their multiplier?

      1. 2slugbaits

        CoRev Krugman himself recommends this link regarding what he meant:

        Krugman was mainly expressing pessimism. He was not cheerfully advocating a housing bubble, but instead he was glumly saying that the only way he could see to get out of the recession would be for such a bubble to occur.


        And Arnold Kling is not exactly someone who would normally be defending Paul Krugman! The context was that Krugman had been writing a lot about deflation in Japan, the paradox of being responsibly committed to being irresponsible about inflation, whether or not sustained fiscal expansion would work and the change in the shape of recoveries (from V shaped to a flatter trajectory). In this particular case Krugman was talking about the paucity of monetary policy options for getting the economy out of a double-dip recession. His argument was that if you only had monetary policy in your tool belt, then creating another asset bubble was the only way out. As I tried to explain to PeakTrader, that was not a policy recommendation; it was simply a sad fact of life if you’re the Fed and you don’t have other tools. Back in 2002 Krugman was struggling with what a lot of the macro models were saying and that a lot of the policy recommendations were counter-intuitive. In hindsight, Krugman’s argument was too subtle for a short NYT blog column and as a result a lot of unsubtle readers completely misunderstood his argument. He ran into the same problem with his blog column about alien invaders.

        1. CoRev

          2slugs, with your latest reference to Krugman’s erroneous writinsg, in the past few articles the count his up to 3. Still, you and pgl seem to revere his writings.

  7. Erik Poole

    I thought Yellen was too dovish. But was that her or the entire ‘Fed collective’? Most likely the latter.

    At the end of the day, Yellen will be remembered as a competent and devoted civil servant while the President Trump will be remembered as somebody who saw the Federal Reserve as a partisan body, as somebody who played to the strengths of America’s enemies and as somebody who did lead America down the road of decline.

  8. dilbert dogbert

    The policies of Bernanke and Yellen both were utter failures according to a group of economists. Those policies were to bring on currency debasement and hyper inflation!!! What an epic failure!!!

  9. Anon3

    Bernanke won a few battles, battles that need to be won, but Yellen won the WAR ………..on retired people.

    1. dilbert dogbert

      I have been retired for 17 years and did not notice the war. I must have been in my bunker with my guns, gold, food, medicine, raw water and bitcoins. I will have to take some time to look outside the bunker.

  10. Barkley Rosser

    I agree with Jim and Menzie and will go even further to say she was probably the best Fed Chair we have ever had.

    I shall also repeat the fact that I was the first person to publicly call for her appointment to that position. That was back in 2009 on Econospeak during the brief moment that it looked like Bernanke might not accept being reappointed Chair after his first term, but of course he did.

    As Jim H,. notes there is a strong staff at the Fed. Let us hope the new Chair listens to them closely.

  11. John the Kopits friend.

    Yellen was a dove, and calm and only medium-smart. She was an easy target for the TBTF lobby, and she acted just like she was told to do.
    No reason to label her an “outstanding public servant”.
    The housewife was told to clean up the mess and she did it.

      1. Moses Herzog

        You get the idea that “Kopits friend” is a middle-aged wash-up that recently lost his job at McDonald’s to a teenage girl after the 10th time he got confused on how to make the french fries??

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