Former chairman of the Federal Reserveuff08 JanetL.Yellen uff09It is highly likely to be nominated by newly elected US President Joe Biden as the new Treasury Secretary, according to local US sources on November 23. If formally appointed, Yellen, 74, will not only become the first female Treasury Secretary in the United States, but also become one of the few economists in the United States who have exerted influence in the White House, the Federal Reserve and the presidents advisory team.
Elizabeth Warren, a Democrat from Massachusetts, said Yellen will be an outstanding candidate for the Treasury secretary. She is smart, strong and principled. As one of the most successful Fed presidents of all time, she fought against Wall Street banks, including holding Wells Fargo accountable for cheating wage earners.
Bidens new administration comes at a time when the U.S. economy is in a deep recession triggered by the new crown epidemic. Millions of Americans lost their jobs, and job growth slowed after a sharp rebound in business in May, June and July. Novel coronavirus pneumonia economists said last week that the new economy of the United States will still be in the first quarter of 2021, as new cases of new crown pneumonia are increasing.
Wall Street analysts generally believe that the Feds monetary policy has run out of ammunition in its arsenal, and that further stimulus from the Treasury will help the economy recover to the greatest extent. Yellen has been calling for more aggressive fiscal stimulus during the recession caused by the epidemic, and she often mentions that growing economic inequality in the United States poses a threat to American values and its future.
At the Treasury, she will play an important role in influencing U.S. fiscal and tax policies, which she does not have at the Federal Reserve. However, unlike the Federal Reserve, which has the space to formulate monetary policy independently, the stimulus plan formulated by the Treasury Department has to be deliberated by both houses of Congress. At present, the Republican Party is likely to maintain a majority in the Senate, and Yellens political communication skills will be tested. Paulson, the Treasury Secretary under the Bush administration, said that it was a hard job for Yellen, but she has experience, talent, credibility and good relations with members of both parties in Congress, and she will create miracles.
Yellen recently said that if Congress does not pass further spending programs to deal with unemployment and maintain the survival of small businesses, then the economic recovery will be uneven and weak. There are a lot of people and a lot of businesses in a difficult situation, she said in an interview on September 28. The economy needs these expenditures. In response, Biden transition team officials believe that if Congress is still hesitant to take action, Yellen can work closely with the Federal Reserve and the executive to gain more support.
U.S. stocks rose after the announcement that Yellen might be nominated. The S & P 500 index was basically flat at the time of the announcement, and then rose, closing up 0.57%. Investors believe that Yellen will push for more fiscal measures to fight the economic crisis caused by the epidemic and maintain close cooperation with the Federal Reserve. Yellen should be pushing for radical fiscal policy, and given her reputation in Washington, she will be the most effective advocate of fiscal expansion that Biden can find. Said Tom Graff, head of fixed income at Brown advisory.
Jason bodorf, a former White House energy policy adviser in the Obama administration, said the nomination of Yellen was also significant for the United States to address climate change. Yellen is an active supporter of climate change policies and agrees to tax carbon emissions. Through tax policies, fiscal appropriations, financial supervision, international climate finance, debt relief and other policies, the Treasury (led by Yellen) has a lot to do.
It is worth mentioning that John Kerry, Secretary of state in the Obama administration, will be named Bidens climate envoy. During the campaign, Biden promised to rejoin the Paris climate agreement.
How can Yellen restart the U.S. economy?
After leaving the Federal Reserve, Yellen returned to the revolving door system. On February 5, 2018, he began to work as a senior researcher at the Hutchins Center for fiscal and monetary policy of the Brookings Institution, and worked with the former chairman of the Federal Reserve again. According to the website of the Brookings Institution, on July 17 this year, Yellen and Ben Bernanke jointly published an article on how to recover the U.S. economy from the epidemic. Given that Yellen may be nominated as Treasury Secretary, some of these suggestions may become specific policies to help the US economic recovery.
In terms of fiscal policy, the article suggests that, first of all, Congress should develop a comprehensive plan to support medical research; strengthen virus detection, contact tracking, and hospital capabilities; provide critical supplies; and support state and local efforts to safely restart businesses, schools, and public transportation. Because nothing is more important than improving public health to restore economic growth. Investment in this area can yield several times the return.
Third, Congress should provide substantial support to state and local governments, as they are in the forefront of delivering critical services, including emergency personnel, public health, education, and public transportation. State and local governments have been at the forefront of planning safe economic restart policies. Huge revenue losses from the recession, combined with the new burden of the new crown pandemic, have left state and local budgets in serious deficit. Because of their limited ability to withstand the deficit, these governments will have to lay off workers and restrict basic services unless they get help from the federal government. As we learned after the financial crisis, fiscal tightening at the state and local levels slowed the national economy, offsetting the benefits of federal policy. In order for state and local governments to continue to provide basic services, and to avoid the recessionary effects of state and local government spending cuts, federal support should be substantial and there should be no excessive restrictions on aid.
The recommendations in this article are consistent with Yellens consistent philosophy, and Yellens first speech as chairman of the Federal Reserve in 2014 was delivered at the national inter agency Community Reinvestment conference in Chicago. She pointed out at the time that behind the economic data are real people who are struggling and eager to have the opportunity to build a better life. So while the Fed operates through financial markets, our goal is to help the general public, not Wall Street. However, this statement does not mean that Yellen is a left-wing Democrat. She praises the rise of financial giants such as Citigroup in the 1990s, and has not supported the call to split them.
Prior to joining the Federal Reserve, Yellen was a professor at the Haas School of business at the University of California, Berkeley, and chairman of the Clinton Administrations economic advisory board. As an economist, Yellen has long been concerned about the vulnerable groups, including the long-term unemployed population, and has an in-depth study of economic inequality. She has visited the vocational training center many times to find out which training programs can better help people find a good job.
Economist Paul Krugman praised Yellen not only has rich practical work experience and brilliant achievements, but also is a real thinker. In the dark time when the intellectuals are faced with the scholars are useless, Yellen can still make her macroeconomics close to the reality and put it into practical use.
Yellen criticized trump for not understanding economic policy
The economic prosperity created during Trumps term of office is greatly contributed by Yellen. During her four years as chairman of the Federal Reserve (2014-2018), Yellen fought against the crowd and insisted on raising interest rates slowly. However, it was her patience and persistence that made the United States go through the longest period of economic expansion in history before the outbreak of the new epidemic, and the unemployment number dropped to the lowest level in 50 years.
The Feds long-term goal for the past six years is to achieve 2% growth, Yellen said in the annual dialogue at Caijings annual meeting in November 2018. Its a complex system engineering, but the Fed is already doing its best to prevent any potential recession.
Although trump strongly criticized Yellens policy, he once held a neutral attitude towards trump after he stepped down. However, when asked in an interview in 2019 whether trump has mastered economic policy, her reply is that she does not think so and suggests that he is a layman on economic policy. Yellen explained in an interview that she doubted whether President trump could clarify the Feds clear goal of maximum employment and price stability, which Congress has given the Fed.
Yellen pointed out that Trumps claim that the Feds target involves trade is objectively wrong. He (trump) said the Fed has an exchange rate target to support his trade plan, or possibly against the trade balance of the United States. You know, I think such comments show a lack of understanding of the Feds impact on the economy and the appropriate policy objectives.