Skip to comments.Yellen hints at boosting inflation to create jobs (Obama's Federal Reserve chairwoman nominee)
Posted on 10/09/2013 3:13:15 PM PDT by 2ndDivisionVet
Federal Reserve chair nominee Janet Yellen Wednesday suggested that she will put a renewed emphasis on jobs in her role as Chairwoman of the U.S. Federal Reserve Bank.
President Obama nominated Yellen, a vice chairwoman of the Board of Governors of the Federal Reserve System and former president and CEO of the Federal Reserve Bank of San Francisco, to run the U.S. central bank Wednesday. If confirmed by the Senate, Yellen will become the first woman to run the Fed in its hundred-year history.
Yellen is expected to accelerate the devaluation of the dollar by continuing or even expanding the Feds open-ended bond-buying program. She has been consistently favored by job-creation hawks, who hope that she will follow a looser inflation policy than they expected from her chief rival for the Fed job, former Treasury Secretary and Harvard University President Larry Summers.
I think its a really good pick, economist Mark Vaughn, a fellow at the Murray Weidenbaum Center on the Economy, Government and Public Policy at Washington University of St. Louis, told The Daily Caller. Shes eminently qualified. Shes got the best résumé of any designate. Shes been president of a bank, and shes been on the board. Shes got an esteemed academic career. Shes a good manager and a good leader.
Yellens brief comments Wednesday suggested she may fulfill some of the hopes of job-creation zealots. Preposterously asserting that the economy is stronger and the financial system is more stable, Yellen added that despite progress under current Chairman Ben Bernanke, U.S. monetary policy has far to go.
The Feds mandate is to serve all Americans, Yellen said. Too many Americans still cant find jobs and worry how theyre going to pay their bills and provide for their families.
Yellen was alluding to the Feds dual mandate of managing inflation and maximizing employment. This mandate is based on an antique economic theory called the Phillips Curve, which posited an inverse relationship between inflation and unemployment.
The Phillips Curve, a relic of Keynesian mythology, has been abandoned by economists after repeatedly failing to bear out in reality most notably during the stagflation of the 1970s, and arguably during the unprecedented economic stagnation of the past six years. Since 2007, Bernanke has quadrupled the monetary base, and inflation which is widely described as being under control or even too low has in fact robbed the dollar of 13 percent of its value, according to the Bureau of Labor Statistics inflation calculator. Yet the economy has moved sideways, inflation remains above 7 percent, and household net worth is about where it was prior to the recession amounting to a massive disappearance of buying power with no discernible positive effects on the economy.
Yellens supporters hope that she will double down on the jobs portion of the Feds mandate. Vaughn cautioned that her willingness to maximize inflation may be overstated.
A lot of people who spend time studying her speeches concluded shes not soft on inflation, he told TheDC. Its fair to say shes more dovish than some other potential nominees, but not a dove. Shes about where Bernanke is.
Vaughn added that Bernankes rampant money creation has added to the complexity of Yellens job.
Her biggest challenge is going to be as much political as monetary policy, he told TheDC. The Fed has this unprecedented balance sheet and shes going to have to unwind it. It has a lot of mortgage-backed securities in its portfolio, and the housing industry is very strong in Washington. This is not a country thats in love with central banking, going back to the foundation of the republic. In some ways, the Fed was lucky in its enemies, because Ron Paul is kind of goofy. But he was making some legitimate points. Her big challenge is going to be maintaining the Feds independence and fighting down political attacks.
Another challenge for any Fed chief is keeping Americans convinced that controlled inflation is a naturally occurring or positive phenomenon a notion that flies in the face of all lived experience for people outside the fantasy realm of monetary policy, who see only boarded-up businesses, high unemployment and endless economic stagnation.
Although monetarists maintain that inflation is a key component of modern economics, it has in fact been understood for centuries. In The Wealth of Nations, economist Adam Smith discusses inflation at length always describing it as debauchment of the currency that enriches the king at the expense of his subjects.
Rather than refuting this obvious point, monetarists rely on hectoring propaganda, such as this short film from the Depression era:
The Fed celebrates its 100th birthday later this year. The dollar has lost more than 95 percent of its value during that time. In the hundred years prior to the Feds creation, the United States expanded from a handful of states on the eastern seaboard to a continent-spanning nation, acquired both Alaska and Hawaii, abolished slavery, built the transcontinental railroad, became an unprecedented world power, and experienced levels of economic growth and social mobility that it has never again matched all of those achievements having been accompanied by steady deflation that left the dollar worth more in 1913 than it had been in 1813.
Oh yeah, inflation is just what we need.
Obama Administration Motto:
“You think it’s bad now? Wait until tomorrow.”
Let’s first see if she can receive confirmation from the Senate.
Can’t wait for those trillion-dollar paychecks.
The 1970’s were so wonderful the first time around.
“Oh yeah, inflation is just what we need.”
This is how the Fed is going to get “paid back” all the money they’ve lent. Just devalue everything and voila!, you have everything “fixed.”
Never mind, I do get it. But its still insane.
“The socialist revolution can only succeed when the bourgeois (the Middle Class)are crushed between the twin grindstones of inflation and taxation
...and how would inflation serve those on fixed incomes and/or savers? Since I am both, perhaps I am no longer part of "all Americans."
THE PHILLIPS CURVE IS DEAD!!!!
In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, lower unemployment in an economy is correlated with a higher rate of inflation.
In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman. Friedman argued that the Phillips curve relationship was only a short-run phenomenon. He argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates.
Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.
I would highly encourage anyone who wishes to understand economics to read this book. It is written in a time when there were a greater number of countries, particularly European, each having its own solution to economic policy. He also had the epitome of economic freedom, the American colonies, to study.
The man was an economic genius for all time.
Tough read, but worth it.
She isn’t going to have any choice. The policies she and her moron hero and Bernanke have been pursuing GUARANTEE inflation.
This is a classic case of trying to get in front of an issue.
Guy on Varney (FOX Business) said he expected deflation then inflation. Obama’s destruction of America as we knew it is on track.
-——Yellen is expected to accelerate the devaluation of the dollar———
bert, bert, bert........... you have been so right for so long it is almost embarrassing
Stagflation 2.0 here we come!
Hints? She's been screaming it. It's why she's been appointed. The beatings will continue till unemployment improves.
Here come the leisure suits.