The Final Word by Rory Ryan
Rory Ryan, Senior Editor, North American Desk
Following last week’s 14-8 vote by the United States Senate Banking Committee, Dr. Janet Yellen is poised to become the first woman to chair the Federal Reserve.
Dr. Yellen, 67, has served as vice chair of the Board of Governors of the Federal Reserve System since October 2010. Before that, she served as president and chief executive officer of the 12th District Federal Reserve Bank in San Francisco.
She is professor emeritus at the University of California at Berkeley where she was a professor of business and economics, and had been a faculty member since 1980. She holds degrees from Brown University, Yale University and taught at Harvard University.
(If nothing else, Dr. Yellen’s pending chairmanship of the Federal Reserve will at least parallel the fact that the United States has not had a president who didn’t attend Harvard or Yale since Ronald Reagan from 1980-88.)
Among those who oppose the president’s nomination are West Virginia Democratic Senator Joe Manchin and Florida Republican Senator Marco Rubio.
Senator Manchin said: “After meeting with Dr. Yellen to discuss her views on how to best grow our economy and balance our budget, hearing her testimony before the Senate Banking Committee, and discussing monetary policy with experts, I cannot support her nomination. I believe that Dr. Yellen is a very intelligent and capable nominee, but her views and beliefs to continue quantitative easing – despite a failure to see any real gains – greatly troubles me. A long time ago, I learned from my family in Farmington, West Virginia, ‘You can’t spend your way to prosperity and borrow your way out of debt.'"
Senator Rubio adds: "I will be voting against her nomination because of her role as a lead architect in authoring monetary policies that threaten the short- and long-term prospects of strong economic growth and job creation. Altogether, she has championed policies that have diminished people’s purchasing power by weakening the dollar, made long-term savings less attractive by diminishing returns on this important behavior, and put the U.S. economy at increased risk of higher inflation and another future boom-bust."
In other words, those opposed to Dr. Yellen's nomination are opposed to the Fed's continuing its "quantitative easing" monetary policy to purportedly stimulate the economy.
Or, perhaps those opposed read former Federal Reserve security purchase program manager Andrew Huszar's recent column in The Wall Street Journal.
Mr. Huszar begins his column with an apology.
"I can only say: 'I'm sorry, America,'" he writes. "As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: The greatest backdoor Wall Street bailout of all time. …
"Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history. And the impact? Even by the Fed's sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth.
"By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn't really working."
Quantitative easing may not be working, but the confirmation of Janet Yellen as the successor to Ben Bernanke ensures the world that it will, in fact, continue.
As Mr. Huszar concludes: The dysfunctional Fed has "allowed quantitative easing to become Wall Street's new 'too big to fail' policy."
And all of us will – eventually – pay for it.
Rory Ryan is Senior Editor, North American Desk, at Paperitalo Publications and the owner of The Highland County Press in Hillsboro, Ohio. He can be reached by email at email@example.com or firstname.lastname@example.org.