15th Chair of the Federal Reserve of United StatesNext
- In-Country Power
- International Power
- Military Strength
- Special Skill: Recession Recovery
- Official Title: 15th Chair of the Federal Reserve
- Government: Well-established democracy
- Years Left in Office: 2018; re-appointment possible
- Political Classification: Center-left
- Education: MS Economics from Brown, PhD Economics from Yale
- Age: 75 (born August 13, 1946)
Janet Yellen Facts and Information
- Janet Yellen has been the head of the US Federal Reserve (the Fed) since February 2014
- The Fed controls all major monetary policy for the US
- The Fed main tool for influencing the economy is by setting the interest rates at the central bank
- Yellen is determined to carry out her agenda concerning unemployment and wages even at the risk of driving up inflation.
Janet Yellen is the main woman of monetary policy in the US, the big Kahuna of the bucks, the head of the Fed! Technically the title is “The Chairwoman of the Board of Governors of the Federal Reserve System” which is the head of the central banking system of the United States. Known colloquially as “Chairman of the Fed,” or in market circles “Fed Chairman” or “Fed Chief”. Yellen has been the chairwoman since February 1st, 2012 taking over for past chair Ben Bernanke. She was appointed by president Obama, and has been battling the impending financial doom in the US ever since. Boy, doesn’t that sound like fun!?!
But let’s get serious about this chick, because, honestly, she holds one of the most powerful positions in the country…and one that in turn affects the entire world economy. So before we go further with the Janet, perhaps its best to look at the Fed first.
The US Federal Reserve—our Central Bank—is one of the country’s most powerful economic institutions in the world because it controls the monetary policy for the largest economy on the planet. What the hell does monetary policy mean anyway? Well, its ‘money’ policy….as in they control the actually US money: the dolla’, dolla’ bills ya’ll! This is not to be confused with fiscal policy which the Congress controls: that’s all about how much money the government spends and takes in, you know, budgets and taxes and stuff. And doesn’t Congress just do a bang-up job with the fiscal policy? Hahahaha…okay enough comedy for know, let’s get back to the monetary policy….
That money policy stuff is the focus of the the Federal Reserve (the Fed), which is the independent central bank established by Congress in 1913. Its primary function is to help maintain the economic soundness of the US economy by setting the interest rates banks charge each other for overnight loans…which in turn affects the rates at all other banks, loan rates, mortgage rates, credit card rates, foreign exchange rates, and even stock and bond trading, By raising or lowering this central interest rate, the Fed can influence how fast or how slow the economy will grow or contract. If they raise the interest rates, it encourages saving; if they lower the rates, it encourages spending.
In addition, the Fed has a few other tools at its disposal: printing, reserving, and loaning. The Fed can juice the economy via ‘injecting‘ money into the system by printing more dollars, although this tactic is not used nearly as much as the general public thinks it is. Much more effective in influencing the supply of money in the system is by raising or lowering the amount of reserves that banks are required to hold in their accounts. In essence, raising reserves means banks have to hold onto more money, which tends to tighten the credit they are willing to extend; lowering required reserves of course have the opposite effect. Lastly, in times of financial crisis, the Federal Reserve is a lender-of-last-resort: it will lend money to failing—but critical—institutions to stabilize the entire financial system.
That last one should ring a bell, right? You remember the “too big to fail” nonsense back when the big recession hit in 2008 that then spurred the Fed to bail out all those crummy banks? I figured you probably did. That was Ben’s work. So Yellen has some pretty big shoes to fill now…
But who is Janet Yellen? What’s her story? How did she rise to such a powerful position? Janet was a Brooklyn girl, born August 13th, 1946. She was the daughter of a Jewish physician and took pride in her education. This put her on the fast track to a degree in economics from Pembroke College (Yale University) followed by a Ph.D. in economics from Brown. Yellen didn’t immediately leave the academic side of her work. She pursued teaching at Harvard for 5 years before breaking into the government sector. She continued on her career working as an economist for the Federal Reserve Board of Governors for a year of so but then found herself right back in academics at the University of California, Berkeley. But she eventually received the call to work for the government again and in 1994 returned to the Federal Reserve Board of Governors. In 1997, she started to shine in the governmental spotlight while serving as the chair for then-president Bill Clinton’s Council of Economic Advisors.
Yellen couldn’t stay away from money. In 2004 she became the CEO of the Federal Reserve Bank of San Francisco. Her expertise with how American economics works brought her to the early conclusion that America was on a spiraling plummet to what would later be known as the housing bubble burst of 2008. How crazy is that? She’s such an economic rock star that despite her colleagues denying her claims, she was still able to predict one of the most massive economic recessions we have seen in decades!
This outstanding work did not go unnoticed. Foreshadowing to her later position, she was considered for the Federal Reserve Chair in 2009, however, Ben Bernanke was re-nominated before plans could move forward. However, she was appointed as vice chair of the Federal Reserve in 2010 and has since then been advocating for the role of the Federal Reserve to control unemployment even at the cost of inflation.
In 2014 though, Yellen was appointed as chair of the Federal Reserve by President Obama. This was a historic decision because not only is she the first woman, but also the first Democrat in over 30 years to hold the position. There couldn’t have been a better person for the job (from a left leaning perspective) because she is an avid supporter of the stimulus packages the Federal Reserve has been pumping into the economy. To date, we are looking at a total of $3 trillion. TRILLION! That’s a 3 followed by 12 zeroes! That’s about the combined GDP’s of Mexico AND Canada. This is how serious Yellen is committed to fight unemployment through the Federal Reserve’s power. With this number continuously growing at $85 billion every month, you know she ‘aint joking around!
Since her appointment to the chair position, Yellen has continued her liberal leaning agenda by pushing for wage reform. After analysis of our current economy, Yellen believes that there is in fact “slack”. What she means by this is that over the years, prices haven’t adjusted as quickly as they should to the inflation we have experienced over the past years. Yellen believes that the rises in prices as a result from raising the minimum wage are in fact inevitable and have always been shielded by this “slack” in our economy. In the long run, Yellen expects this to stimulate the economy from 2% to about 3 to 4% growth.
In recent events though, Yellen is receiving a lot of flak for her goals. Many fear that the rise in inflation as a result from her efforts may not be worth the benefit. A Wall Street Journal Market Watch article calls out Yellen for ignoring the sub-par 2014 first quarter performance as well as the indications that inflations rates are beginning to rise. The article suggests that we may be facing stagflation in the upcoming years. What the hell is stagflation though? It sounds like a kind of medieval torture method. Stagflation is when an economy faces high inflation rates coupled with high unemployment and slow growth. With the rise of inflation rates, predicted and even addressed by Yellen herself as a result of her policies, we will similarly see a rise in interest rates. The combination of these two will bring the economy to a grinding halt faster than you can say “show me da money!” This of course is only entertaining the situation of Yellen being wrong. I don’t want you to think that the Plaid Avenger is preaching absolutes of economics or adhering to a certain left/right political agenda. This is only a possibility of what could happen in the event Yellen is wrong.
So as Yellen takes office, keep this in mind. Like I said before, it’s the first time that a leftward leaning individual has held the position and you can bet your bottom Federal Reserve dollars that we will be able to see some changes as a result of that. But for now, keep the economy on track by going out and spending every cent you have! Make Janet proud!
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