5 things to know about Janet Yellen

President Obama will nominate Yellen to be chairman of the Federal Reserve, succeeding Ben Bernanke.

By MSN Money Partner Oct 9, 2013 2:05PM

The Wall Street JournalFile photo of Janet Yellen on April 4, 2013 (© Pete Marovich/Bloomberg via Getty Images)By Victoria McGrane

 

1. She has pushed the Fed to use aggressive new policies to boost the economy.

Yellen, who focused much of her academic research on the costs and causes of unemployment, has consistently called for the Fed to respond forcefully to high joblessness. She argues that inflation isn't likely to emerge with the economy in such a debilitated state – a point on which so far she has been right. "These are not just statistics to me. We know that long-term unemployment is devastating to workers and their families," she said in a speech to the AFL-CIO labor union in February.

 

2. She has a record of being concerned about excessive inflation.

Her public statements and past actions show she is committed to maintaining low inflation. The Fed "is determined to ensure that we never again repeat the experience of the late 1960s and 1970s, when the Federal Reserve didn't respond forcefully enough to rising inflation," she said in a 2011 speech.

 

She was a longstanding proponent of the Fed adopting a 2 percent inflation target, and was closely involved in the decision to do so in 2012. In 1996, while a Fed governor, Yellen debated then-Chairman Alan Greenspan over the right level of inflation, contending that too-low inflation could harm the economy just as too-high inflation could — a view that is now widely accepted at the Fed, but wasn't then. Later that year, she urged Mr. Greenspan to raise short-term interest rates, fearing the booming economy threatened to unleash excessive inflation — advice he declined, according to former Fed governor Laurence Meyer.

 

3. She is a good forecaster.

The Fed must forecast growth, inflation and unemployment to make policy decisions. Yellen has produced the most accurate forecasts of all the current Fed officials from 2009 through 2013, a Wall Street Journal analysis found.

 

4. The financial crisis made her a believer in tougher financial regulations.

Yellen has said that the 2008 financial crisis, which occurred when she was president of the San Francisco Fed, transformed her from a somewhat "docile" regional bank regulator to a believer that firm rules are more effective than leaving it up to regulators to react when trouble appears on the horizon.

 

"This experience has strongly inclined me toward tougher standards and built-in rules that will kick into effect automatically when things like this happen that make tightening up a less discretionary matter," she told the congressionally-created Financial Crisis Inquiry Commission in a 2010 interview in which she expressed frustration at how long it took the Fed and other regulators to negotiate and issue new rules.

 

In a June speech, she said the Fed might need to require the nation's largest, most complex banks to carry even fatter capital cushions against losses than required by new rules set out by international regulators, a prospect hotly contested by big U.S. banks.

 

5. She believes in transparency, and the markets thinks she's a good communicator.

In 2010, Bernanke asked Yellen to lead an internal communications committee that has produced several innovations in the way the central bank articulates its goals and policy plans to the public. These include so-called forward-guidance in which the Fed makes statements about the likely future course of policy, which has evolved to employ specific unemployment and inflation thresholds; the regular press conferences Bernanke holds; and a longer-run goals and strategy document released in January 2012 that laid out, for the first time, the rates of inflation and joblessness the Fed finds to be consistent with its mandate from Congress.

 

"The effects of monetary policy depend critically on the public getting the message about what policy will do months or years in the future," she said in a speech to a gathering of reporters and editors in April. "I hope and trust that the days of 'never explain, never excuse' are gone for good," she said.

 

Market participants think she does a good job of explaining the central bank's thinking. In two separate surveys last year, officials at primary dealers — banks that do business directly with the Fed — responded to general questions about the Fed's communications by saying Yellen's speeches were particularly helpful.

 

More from The Wall Street Journal

20Comments
Oct 9, 2013 2:24PM
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She will be a money printer just like her Daddy, 'Benny Bucks' Bernanke.
Oct 9, 2013 2:25PM
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6. She will print money and pump up the stock market like there's no tomorrow.

7. She never saw a banker she didn't love..

8. Why didn't she see the housing bubble and communicate that, if she's so smart and such a "great communicator and forecaster", I mean Berkeley and all?

9. She's a complete tool of Wall street.

10. She's a crazy old lady.

11. The USA is hosed.

Oct 9, 2013 2:14PM
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It's going to take much more than praise to get the American people to trust anyone in Washington right now. Actions speak louder than words. Let's come back to the discussion on the new Fed in a year or so after she has held the post for a bit.
Oct 9, 2013 2:23PM
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 Good Lord this twat has nothing but  funny money for the corrupt Nazi democrat party. No matter the drooling stupid democrat voter is oblivious brainwashed with nope hope for change. Trillions worth of Obozo the socialist clown debt and trillions of Fed Money for the democrat wall street "thugs". Result 5 years later? Lowest Labor Participation Rate Since 1978.  You Rock Democrats!
Oct 9, 2013 2:19PM
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Well I'm glad she believes in "transparency" like Obama does...NOT!
Oct 9, 2013 2:44PM
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I am thrilled with her selection. My $10,061.00 MMF earned $1.24 interest last month.  Figuring if were careful with the money the wife and I can have a night out on the town with a couple of Big Macs come the end of 2014. Goodbye to Big Ben & welcome to Jaded  Janet, I'm sure seniors and those relying on fixed income investments to tide them over  are overjoyed with the prospect of just more of the same.
Oct 9, 2013 2:38PM
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Appointed by Obama, is cause enough to be leary. A financial "Van Jones"?
Oct 9, 2013 2:47PM
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I'm not remotely interested in another wench off the bench of righteous women wrecking more of America under the guise of equality that isn't. Bernanke has done irreparable damage. Open the field of contention to ANYONE who has a better theory on how to reverse that fiat money printing, rein in and call FALSE $632 TRILLION in derivative contracts and calls "member banks" out on a ledge and offers either a push or the threat to start doing ETHICAL business or jump. If Yellen is somehow qualified-- let's hear her specific course NOW before she takes the Chair... and let US evaluate it. Failure to listen AGAIN makes war. Is that becoming our only option? 
Oct 9, 2013 2:54PM
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This media just loves and feeds off of the Obama administration.  He can't do any wrong in their eyes.  Quick lets write a positive opine piece about newly appointed Yellen so we can drool over how much we are pleased with his selection because of how liberal her policies are...

I'm not saying she is a bad appointee but simply pointing out that the double standard for liberalism in the media is disturbing to say the least. 
Oct 9, 2013 4:07PM
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I believe we are seeing less and less Real commentary and  TRUE analysis and more and more PROPAGANDA  and JUNK.......I find myself reading less the main article   and more  the forum commentary..more HONEST and.more entertaining as well
Oct 9, 2013 3:28PM
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"Investors were optimistic about the expected nomination of Yellen as Fed chairman, to be announced Wednesday afternoon. They expect her to tread carefully in winding down the Fed's economic stimulus and to provide continuity with the policies of Fed Chairman Ben Bernanke, whose second term is due to expire on January 31.

"She is generally seen as more dovish than Bernanke," said Matousek."

 

 "She has pushed the Fed to use aggressive new policies to boost the economy."

 

Two different articles on MSN with opposite views on this woman. That tells me all that I need to know. Wall Street is dictating to the government, and we're going to continue to get screwed. So much for the dollar.

 

Oct 9, 2013 3:05PM
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"Never before has so much been said that conveyed so little in so grandiose a manner."

Oct 9, 2013 2:42PM
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Based on the markets rise today- almost anyone can predict a resolution to the current shutdown is on the table and leaked to wealth. The problem is two-fold... it solves nothing because nothing has been resolved or even acted on. Fold two-- there are likely far more derivatives than $632 TRILLION negotiated just this past week or so. 
Oct 9, 2013 4:39PM
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I don't want Janet Yellen for fed chairman. We need someone who will stop the stimulus and money printing. I have emailed both my senators and house rep.
Oct 9, 2013 9:32PM
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When I starting reading this, I thought, wow, this sounds so much better, 2% inflation instead of 3% or more, but towards the end, it sounds bad.

 

If bad forecasters can damage the markets so bad, how much more deceit will good forecaster's use?

 

"4. The financial crisis made her a believer in tougher financial regulations.

 

... In a June speech, she said the Fed might need to require the nation's largest, most complex banks to carry even fatter capital cushions against losses than required by new rules set out by international regulators, a prospect hotly contested by big U.S. banks."

 

Do these kind of banks really need to hoard more money?

 

Then finally it ends with Janet Yellen being a good communicator?  The Federal Reserve doesn't need a PR campaign, it needs to stop printing the lie of unbacked, fiat money.  Period.

 

Who is this Victoria McGrane?  I can't tell, but it looks like the Wall-Street Journal and MSN Money Partner may have some vested interest in the publication, circulation, and acceptance of this article too.

Oct 9, 2013 8:38PM
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Bleached blonde, pinko-commie, Obamanightmare, rubber stamp, dimwit bimbo.....just another brain dead syphilitic moron on the DC chessboard.............where there is no leadership, the people shall perish...here we go again
Oct 9, 2013 4:06PM
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 Hello MSN did the negative obozo comments deem this article off the front page? Sick Nazi propaganda freaks!
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