Janet Yellen is Wrong Again

“My judgment right now is that the recent inflation that we’ve seen will be temporary. It’s not something that’s endemic.”
– Janet Yellen, May 27, 2021

“I do expect inflation to remain high, although I very much hope that it will be coming down now.”
– Janet Yellen, June 7, 2022

“Hope is not a strategy.”
– Unknown

In 1977, after a young PhD assistant professor in economics failed to receive tenure at Harvard, she did the next best thing… She took a job at the Fed. 

Since that time, some 45 years ago, Janet Yellen has been working in academia or government in some capacity or another. (The Fed really isn’t a government agency, but it’s become so politicized over the years that it may as well be.)

To her credit, in the last months of her chairmanship at the Fed she did try to scrape the Fed funds rate off the sole of the economy’s shoe where it had been stuck like a piece of gum for the preceding eight years. She managed to raise the rate to nearly 1.5% by the time she was excused from her position by President Trump who nominated Jerome Powell…  Who promptly continued normalizing rates until the market (and the president) threw a tantrum in 2018.

Three years after her departure from the Fed, Yellen was named Secretary of the Treasury…  A feat accomplished only once before (as far as I can see) when Fed Chairman G. William Miller was nominated to the spot by President Carter in 1979.

Two Goals, One Plan of Action

As Fed Chairman, she was in charge of “monetary” policy — i.e. Maintaining economic stability by managing the money supply. 

At Treasury, she is in charge of administering “fiscal” policy — i.e. Maintaining economic stability by collecting, borrowing and spending.

Treasury’s mission in a nutshell (according to their webpage and with my emphasis):

The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States

The goal of “promoting economic prosperity etc” is a pretty important one. 

And given the fact that one explicit mandate of that mission is “Managing Government accounts and the public debt,” you might question how good a job the department as a whole has been doing over the past few decades given that the country is over $30 trillion in the hole.

But the past is the past. What’s her plan going forward?

Well, as Treasury Secretary so far, she has espoused some interesting opinions…

She has redefined the Biden spending agenda as “Modern supply-side economics” and insisted that the American Rescue Plan did little to impact the inflation we’re seeing now.

And that’s not all…

“Treasury is actively working with the White House, Congress, and others to ensure that our domestic economic programs and tax policies support our climate goals, including a transition to a decarbonized economy, building climate-resilient infrastructure, and designing the climate transition to support equity and well-paying jobs.”
– Janet Yellen, April 6, 2021
(Discussing the threat of climate change to the Coalition of Finance Ministers for Climate Action.)

The woman who couldn’t see the wave of inflation that was about to hit our economy and who defended the $1.9 trillion ARP calling it the new supply side economics now wants to take Treasury all in on an unproven and definitely questionable green new future. 

How’s that line up with the job description?

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily

P.S.

FYI — I’ll just leave this here…

(WSJ June 9, 2022)