Tag Archives: Janet Yellen

OC Register on Yellen as Fed Chair

I didn’t see this until today, but earlier this month the Orange County Register was kind enough to cite me in an editorial about Janet Yellen shortly after her confirmation vote.

Two Cheers for Tapered Quantitative Easing

The Federal Reserve made waves when it announced it was rolling back its quantitative easing program. Looking more closely, one finds it’s actually a very minor policy change, moving from $85 billion to $75 billion per month. Over at the Washington Times, I encourage the Fed to taper back the rest of the QE program, and point out that the Fed may be sending a subtle political message about how presumptive incoming Fed Chair Janet Yellen will approach inflation:

Johns Hopkins University economist Steve Hanke argues that Ms. Yellen is more hawkish on inflation than her dovish reputation suggests. The tapering announcement seems to confirm Mr. Hanke’s thesis. As the Fed’s current vice chairman, she already has significant say on Fed policy. She has publicly supported the new Basel III reserve banking standards, which would require banks to hold more of their capital in reserve. That would decrease the amount of money in circulation — the exact opposite effect of quantitative easing — and help keep inflation in check.

There are plenty of problems with the Basel III standards, but this would be one positive effect. Read the whole thing here.

Questions for Janet Yellen

janet yellen
The Federal Reserve is arguably the government’s most important agency, even if it is (nominally) independent. It has control over the price system, the most fundamental part of any economy. It also exercises significant power over the banking sector, and in recent years has taken to doing large favors for Wall Street. These are all reasons why Janet Yellen’s nomination for Fed Chair needs to be carefully vetted. To that end, my CEI colleagues John Berlau and Iain Murray and I put together some questions about several facets of the Fed’s mission we would like to Yellen answer, whether during her confirmation hearing or elsewhere. You can read the short WebMemo here. Here is one of our questions about inflation:

Many observers expect you to pursue an inflationary stimulus, and believe this is likely a reason for your nomination. If your actions are already expected, will markets not take these expected price level changes into account in advance? If so, do you believe this would blunt the employment impact of any monetary expansion? Would you respond to these pre-existing expectations with an unexpectedly high inflationary policy?

As John, Iain, and I write, Yellen’s credentials are not in question. But the policies she might pursue as Fed Chair are. Read more here.