Why I'm Very Happy About Janet Yellen … President Barack Obama plans to nominate Janet Yellen as the next chairman of the Federal Reserve Board. In doing so, he will promote the pre-eminent policy economist of her generation to the role of the most powerful central banker in the world. Yellen is quite simply more qualified for the job than any of her predecessors … Tonight, I feel reassured that my daughter's economic future is in good hands. I also plan to tell her that she, too, can grow up to become the most powerful economist in the world. It's a potent stimulus. – Bloomberg
Dominant Social Theme: And she shall lead them just as Joan of Arc did.
Free-Market Analysis: Joan of Arc was apparently a very courageous woman; Janet Yellen may be seen as equally so.
We're bringing up the "w" word only because this Bloomberg columnist did in the article excerpt above. To be fair, this article moves well beyond the issue of feminine versus masculine. It lauds almost everything about Ms. Yellen's character and knowledge base.
It's truly adulatory. But why shouldn't it be? Central banking remains a singular dominant social theme of the elite – one with almost religious overtones. A day ago, articles were already crowding the front page of Google, shouting the news excitedly like digital town criers.
One almost expected smoke to hover above the White House as it does at the Vatican when the cardinals are deciding on a new pope.
Here's more about Ms. Yellen's nascent godhead:
She's an imaginative and technically adept economist possessed of a brilliant and precise mind. As a researcher, she has made fundamental contributions to our understanding of unemployment and the importance of smoothing out the ups and downs of the economy. She has demonstrated an ability to navigate political corridors, having served successfully as the chairman of President Bill Clinton's Council of Economic Advisers.
She's also battle-tested, having worked in key policy roles through both the Asian financial crisis and the recent global financial crisis. She has spent most of the past two decades as a leading voice within the Fed, initially as a member of the Federal Reserve Board of Governors, then as president and chief executive officer of the San Francisco Federal Reserve Board, and over the past four years as vice chairman of the Federal Reserve.
No Fed chairman has ever been subject to as robust a public vetting as Yellen has over the past two months. It's notable that through the drawn-out public debate over who should replace current Fed Chairman Ben Bernanke, not a single economist who has ever worked with Yellen has had a bad word to say about her.
Yellen's appointment is also a historic moment: If confirmed by the Senate, she will be the first woman ever to lead the Fed. Economics remains an excessively male-dominated field, and this is particularly evident among the world's central bankers. The European Central Bank's governing council, for example, counts no women among its 23 members. Likewise, there are no women on the Bank of England's Monetary Policy Committee.
… If Yellen had been in charge of the Fed over the past few years, millions fewer would be jobless, and we would be less concerned about the danger of deflation. The point is that Yellen's pragmatic reading of the macroeconomic tea leaves has led her to avoid the errors of her theory-bound colleagues who have seen the threat of inflation around every corner. Both hawks and doves should applaud this appointment. Yellen's appointment should be viewed as an investment in the Fed's dual mandate, which emphasizes the central bank's role in taming both unemployment and inflation.
This is really remarkable stuff – a quasi-religious paean to someone that doesn't even seem recognizably human … more like an unbeatified saint. And we didn't even include a long peroration about her "humbleness" and how she can make even the most junior staffer feel at ease and valued.
The end of the article points out that the unemployed should feel grateful that they have a champion of monetary easing at the head of the Fed – and in some ways creates a truly unusual mental picture. One can actually imagine a French romantic painting along these lines: Indigent and ragged US citizens stretch out their arms, pleading as the authorities clatter by on big, armored horses, their gilded capes flapping in the breeze.
Madame Yellen, of course, would be riding right at the head of the phalanx, confident of her course and proud of her position. Forget about all the rest of it, which may be at least somewhat true, or may simply be puffery. What comes across clearly is her almost awe-inspiring bravery.
Ben Bernanke is not so brave. He is probably leaving because there is no real way to avoid the catastrophe headed this way. If major central banks tighten, equities will tumble and the West will face a renewed Great Recession. But printing money, something Yellen is said to be especially fond of, is going to raise price inflation through the roof sooner or later.
And so Bernanke, who's been beaten up for a good half-decade now, is getting the heck out of Dodge. Ms. Yellen is the new Savior. Humble, brilliant, forceful and accommodative, she will begin by making wine out of water and then she will feed fishes to the hungry multitudes until they are full.
Finally, she will begin to print money. She doesn't know how much money to print, but she will print a lot of it. She will ask her "peers" sitting around the big conference table how much THEY think she ought to print. And then, apparently, she will take everyone's opinion into account before making a decision.
This, we are often told, is the genius of the sex. Women are just naturally more cooperative than men. If there are enough women in office then wars will stop and prosperity will advance. At least that's what they predicted 100 years ago.
What WE predict is that Ms. Yellen and her cohorts will continue the ruinous policies that have sunk the retirement of millions and forced tens of millions more out of their homes and jobs. The central bank economy of the past 100 years is as bloody in its own way as the century itself. Nobody can predict how much money is enough or too much. Only the market can. Ms. Yellen and the rest are professorial price-fixers – and price fixing never works.
It doesn't matter that Ms. Yellen is a woman, or that she is forceful yet accommodative, confident yet collegial. The system in which she is ensconced is a dysfunctional and illogical one. It produces tidal waves of currency that fool people into thinking they are wealthy before bankrupting them.
Only market competition can determine the volume and price of money. The quasi-monopoly that Ms. Yellen will operate can only lurch from one monetary disaster to the next. And that is not going to change with her ascension. About the best that can be said for her is that she is brave, very brave, to assume this job at this time.
As for the worst that can be said for her … well, there is plenty of time to sort that out. For "worse" no doubt is coming …
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