One of the concerns surrounding Janet Yellen, Obama's nomination for the head of the Federal Reserve, is how she's going to balance jobs and inflation. Is she a hawk, or a dove?
She has been known to stress the need to fix high unemployment, maybe even at the risk of triggering inflation by doing so. To increase employment last year, she pushed hard to keep interest rates close to 0, risking a brief inflation increase. By seemingly valuing jobs over inflation, she's often been called a dove. But some argue that she's a "hawk in dove's clothing," since she did argue for rate rises in 1996 in order to control inflation. Balancing both views, Yellen's friend and writer for Bloomberg praises that "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" (Source: Bloomberg). Maybe she's not a dove or a hawk. Maybe she just adapts to changing circumstances, which is a relief, because she won't be as susceptible to endangerment by natural selection as the doves and hawks are.
Yellen's extremely impressive record, experience, ability to cooperate and compromise, creativity, work ethic, and educational background all convince me that she will be brilliant as the Fed chair. Furthermore, I believe she will inspire many aspiring young women, including myself. But do you think she'll be able to handle it? The dual responsibilities of the Federal Reserve (handling unemployment and inflation) proved to be a challenging for all previous Fed chairs. How will Yellen be different than Bernanke, or other chairs before her? Do you think she's a good fit for the job? Is she a hawk or a dove, and what would that mean for the country as a whole?
Lastly, can we just take a moment to recognize how awesome she is? And adorable?
3 comments:
Yellen has worked for the Federal Reserve for many years, and I think that her prior experiences will make her an excellent Chair. Her willingness to tackle both unemployment and inflation prove her flexibility, despite the inverse relationship of the two. But we'll have to wait and see. It may be a challenge for Yellen to replace Chairman Bernanke, whose influential policies have helped guide the U.S past the recession.
I believe that Yellen is both a hawk and a dove since she primarily focuses on fixing unemployment, but has also attempted to avoid inflation in the past. She favors a policy called "optimal control", which means that she is willing to raise interest rates when unemployment and inflation are doing better. In my opinion, Yellen will make a good Fed Chief, and I agree that she is quite an awesome woman.
If it's true what Patricia says, that Yellen favors optimal control, then she's just the perfect candidate for the job. As Jackie has alluded to, the chairman of the Fed has a tricky balancing act to manage at present. The economy right now is heavily dependent on the easy money that the Fed has been producing in order to create jobs. Quantitative easing, among various other Fed measures, has been helping to stimulate the economy by keeping interest rates near 0, but doing this risks high inflation when the economy picks up. However, weaning the economy off of easy money before it has recovered sufficiently comes with the risk of a slowed recovery. As chairman, it will be Yellen's job to find the optimal point between these two scenarios to let interest rates rise again.
As for whether Yellen is a dove or hawk, I believe she is more of a dove than a hawk. For Obama, the main issue right now is still jobs, with unemployment still hovering above 7%. Inflation at the moment is still safely under 2%, so the Fed chair can and should still keep the focus on jobs. Thus, if Yellen wasn't more of a dove than a hawk, then I doubt Obama would have nominated her in the first place.
But yes, if she is confirmed by the Senate (which is likely), congratulations to her for becoming the first female Fed chair in US history. Also though, good luck because she's got her work cut out for her.
I definitely see Patrick's point about how Obama wouldn't have nominated her if she wasn't a dove and focuses on unemployment, which is still a major concern for Obama. Like Patrick said, inflation right now isn't as big of a problem as unemployment, but I think Patricia's comment about Yellen's support for "optimal control" proves to be a demonstration of how she'll be able to change priorities if needed, like a Fed chair should do.
Post a Comment