October 11, 2013

The Next Chairperson of the Federal Reserve


Or at least she better be. Janet Yellen was nominated for the Chair of the Federal Reserve, and no nominee has gotten less than 70 votes in the Senate for their confirmation. But the low of 70 was for the current Chairperson, Ben Bernanke, a Republican nominated by a Democrat.

She is the first woman to be nominated for the position; and the best person for the job. She is immensely experienced, and respected in the economics community. She has frequently been called a "dove", which is to suggest she is less concerned about inflation than a "hawk" would be. This is a lazy misnomer: Yellen has defended the Fed's 2% inflation target as much as anyone. It's only now that unemployment is above "full employment" and inflation has been consistently below the Fed's target that she has been a leader in structuring the Fed's unconventional policy responses. 

The correct debate isn't about inflation hawks vs. doves. It's about whether a person feels monetary policy is effective enough to bring unemployment down, and inflation up, to target even when interest rates are near 0%. It is, and Dr. Yellen knows this.



On a related note: below is a chart of the recent history of female central bankers. Basically they're under-represented, to the detriment of us all. Corporate boards with more representative female membership make better decisions. Like all types of diversity in decision making bodies, the more the better.



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