ORf all 78 United States Secretaries of the Treasury Since Alexander Hamilton first took office in 1789, few have faced an inbox stacked as high as the one that will welcome the first woman to the job: Janet Yellen.
The choice of the Brooklyn-born doctor’s daughter to succeed Steve Mnuchin was a declaration of intent from President-elect Joe Biden. While many of his predecessors have been scions of Wall Street, Yellen’s expertise is in economics and public policy, and he has made it clear that his priorities are struggling Americans rather than investment bankers. “There is a lot of suffering out there,” he said in September when he urged Congress to agree to a new stimulus package.
Yet Yellen’s expressed desire for stricter financial regulation did not stop Wall Street from joining in the applause for his nomination. In part, that was due to the fact that, having been the first woman to be in charge of the central bank of the United States, she is seen as a seasoned professional. Donald Trump refused to give her a second term as chair of the Federal Reserve in 2018 not because she was doing a bad job, but because she was a Democrat appointed by Barack Obama.
More importantly, however, Wall Street sees Yellen as a Treasury secretary who will push hard for expansionary policies aimed at boosting growth, earnings and the price of stocks. Nothing in your record suggests that the financiers are wrong.
American economists often divided into two fields: “Freshwater” economists who believe in the primacy of market forces and whose spiritual home is the landlocked University of Chicago in Illinois; and “saltwater” economists, who emanate from the universities of the Atlantic and Pacific littorals and admire the teachings of John Maynard Keynes.
Yellen is Keynesian through and through: she warned against a hasty removal of the stimulus during the financial crisis of a decade ago; she insisted that the Fed pay as much attention to unemployment as it did to inflation when she was its president; and believes that the state has a duty to address poverty and inequality.
Mohamed El-Erian, once CEO of investment management firm Pimco, but now president of Queens’ College, Cambridge, said: “The appointment was probably one of the most well received in the history of the US Treasury, and for good reason. Economists, legislators, and market participants rightly view her as highly qualified, with a lot of relevant experience, and coming to work with a deep understanding of national and international issues. The policy portfolio you inherit will require an agile combination of traditional and original thinking. “
At the top of the to-do list will be a new support package for an American economy struggling with three interrelated problems: a pandemic, high levels of unemployment, and the impending expiration of financial support for laid off workers.
The total jobless has fallen since rising to levels not seen since the Great Depression in the first wave of infections in the spring, but it remains worryingly high for a country with, by Western standards, a limited social safety net. Furthermore, the latest data on Friday showed that the job creation rate is slowing.
Biden wants Congress to pass a “robust” stimulus package, and the chances of that happening will be vastly improved if Democrats take control of the Senate by winning the two vacant Georgia seats next month. If not, as Mark Sobel of think tank Omfif puts it, Biden will face a “tight-fisted” Republican Senate leader, Mitch McConnell.
“Yellen will help negotiate and provide intellectual backing, arguing that now is the time to spend and that with low debt service costs, the United States should not worry in the short term about rising debt,” says Sobel.
Getting an emergency stimulus package through Congress will only be the beginning of the legislative battle, because Biden also wants to spend more on improving America’s crumbling infrastructure and addressing global warming.
Yellen’s scope for fiscal action (fiscal and spending measures) may be limited by deadlock in Congress, in which case the White House will require the Fed to provide more stimulus and a good working relationship between Yellen and the man who She was succeeded as head of the central bank, Jerome Powell.
While ordering the labor market and improving living standards will be the biggest challenge, Yellen will also spend time on other policy issues. It has the executive power to toughen what it considers to be too weak financial regulation without Congress saying so; take a less hostile, yet still firm, approach to China; and it will seek to reaffirm the leadership of the United States on the global stage, following a multilateral approach rather than an autonomous approach.
In all, Yellen can be expected to act as if Trump’s four years in office never happened. The message will be that adults are back in charge.
Six central bankers who shaped the future of their economies
Ben bernanke Chairman of the US Federal Reserve Between 2006 and 2014, Bernanke was credited with preventing a deep recession after the 2008 financial crisis. A student of the Great Depression of the 1930s, he vowed to rescue the banking system and keep funds flowing to avoid a wave of foreclosures and mass unemployment.
His determination contrasted with that of the Bank of England, which hesitated before rescuing Northern Rock. However, Bernanke, a former Princeton professor, downplayed the threat from US subprime mortgages. Scandal during the first two years of his mandate, which he has admitted had greatly aggravated the crisis when it arrived.
Karl Otto Pöhl Often nicknamed the father of the euro, Pöhl was appointed president of the German Bundesbank from 1980 to 1991 by his friend and mentor, Chancellor Helmut Schmidt. A quaint English-speaking former economics journalist, he rose to fame after conservative Helmut Kohl shocked many and reappointed him. He warned Kohl not to rush ahead with German unification based on a one-to-one valuation of the East German mark with its West German counterpart, fearing the collapse of the uncompetitive export industries in the east. He said the same about the implementation of the euro. Kohl ignored it. The East German industrial base collapsed. After the 2008 financial crisis, southern Europe erupted in unrest, with protesters blaming the euro for their ills.
Mario draghi If Pöhl laid the cornerstones of the euro, Draghi prevented the currency from collapsing. In 2012, after campaigns in several member states to abandon the euro, especially in Greece and Italy, he caused panic in the financial markets, said that the single currency was “irreversible” and promised to do “whatever it takes” to save her.
As president of the European Central Bank from 2011 to 2019, which absorbed most of the powers of the central banks of 19 member states at its creation in 1999, he drew a line in the destabilizing debate over the future of the currency. After his resignation, the Nobel Prize-winning economist Paul krugman described it as “[arguably] the greatest central banker of modern times”.
Mark Carney Carney was Governor of the Bank of England from 2013 until March of this year. He was appointed by then-chancellor George Osborne, who courted him for a year and called the former Goldman Sachs banker and head of Canada’s central bank “the outstanding central banker of his generation.” However, after a year, he was compared to an “unreliable boyfriend” who failed to deliver on his promises with action. This followed a series of overly optimistic forecasts that led many to brace for a rise in interest rates that never came. Carney, more polished and elegant than his contemporaries, regained much of his reputation in 2016 when he was dubbed “the only adult in the room” after the Brexit referendum. As Parliament went into shock and No. 10 was consumed by David Cameron’s resignation, Carney scoured the radio and television stations, calming nerves.
Raghuram Rajan The Chicago economics professor Booth is often described as one of the few economists who predicts the financial crisis. In a 2005 speech to the world’s leading central bankers, he explained that a lending explosion was making financial markets more dangerous. At the time he was chief economist at the International Monetary Fund, so you might have expected him to take seriously his warning that “it is possible that these developments are creating a greater (though still small) probability of a catastrophic collapse.” It was not.
He took office as governor of India’s central bank in 2013 after warning that the country suffered from arrogance, adding that “growth can never be taken for granted” and that “self-deception is the first step towards disaster.” The rupee, which fell 12% against the dollar in the three months before its arrival, stabilized. When he left in 2016, price inflation had fallen from almost 10% to less than 4% and a series of banking reforms had been implemented.
Christine Lagarde As president of the European Central Bank since last year, Lagarde has proven herself to be a future central bank hero. Turning the dial at an institution that covers 19 countries is never easy, but the former IMF chief has embarked on a campaign for greater transparency in a break with the traditionally closed bank decision-making, and for unemployment and inequality be the most important. a criterion for the ECB as inflation. He has also matched Carney in the drive to make central bank lending more climate-friendly, with green bonds that only allow loans to companies that are environmentally friendly. Pi
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