Trump says she's a political stooge. Actually, she's reinventing our understanding of economics.Good post on Janet Yellen.
She's a Keynesian that takes both uncertainty and employment seriously.
Politico
Janet Yellen's Quiet Revolution
Zachary Karabell | head of global strategy at Envestnet, author of The Leading Indicators: A Short History of the Numbers That Rule Our World, and a contributing editor at Politico Magazine
ht Barry Ritholz at Bloomberg View
5 comments:
"Yellen is acting out a very personal drama, one that reflects her entire professional career stretching back more than nearly four decades through academia"
Yeah, she's figuring out that she and all of her monetarist cronies are/is/was completely full of shit the whole time... gotta be painful...
More 'central bankism' mystique, the mainstream is so full of it...
I specially enjoy how they keep pretending that rising or lowering rates a 0.25% here and there has any sort of durable structural impact on the economy. But when all you got is a hammer everything looks like a nail.
If she actually wanted to challenge anything he would be calling bullshit on politicians and schooling them, but all those academic types and cronies have too much to lose to risk it, and anyway they believe their own "central bankism" mystical monetarist crackpot ideas too much to do anything about it anyway...
The new monetarism.
Market monetarists prefer a nominal income target due to their twin beliefs that rational expectations are crucial to policy, and that markets react instantly to changes in their expectations about future policy, without the "long and variable lags" highlighted by Milton Friedman.
The real power of the Fed Chair, as Marriner Eccles demonstrated, is to use the Fed's bully pulpit to shape the national debate and to shift the Overton window. Yellen has shown no inclination to do that.
Ask yourself what would Marriner Eccles be doing if he were Fed chair today?
"Market monetarists prefer a nominal income target"
Market monetarists offer liquidity to rich asset holders - essentially underwriting the monetary value of those assets.
They turn the central bank into the rich man's pawnbroker.
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