The five characteristics of Janet Yellen as Biden’s Treasury Secretary

How nice, young Janet Yelle has been chosen by Biden as the next treasury secretary. Straight from the Fed, from monetary policy, to ministry, to fiscal policy, it is a passage that is rarely seen in Western countries. What are the characteristics of the next “Yellen government”?

• First, is the United States becoming a gerontocracy? Alongside Biden (78), John Kerry (76) leads the "charge" on the climate crisis, while Yellen is 74 years old – and Nancy Pelosi in the chamber is 80. On the other hand, Trump would be 78 years old if he went back to racing in 2024, which seems almost certain in what the market regards as a certain event if its legal challenges fail; Wilbur Ross (82), who is still 'in the running' for the trade; Larry Kudlow (73); and Rudy Giuliani (76). All of this feels similar to the original Star Trek cast films (or even the recently revamped Picard series), where much of the special effects budget has been spent on wigs and trusses. (OK, not so much the wig for Picard, …)
• Second, what does this say to younger and / or progressive political voices pushing for fresher thinking? Yellen's long career span, from academic economics to economic advisor to presidents, then to head of the Fed, and now to head of economics for a president, hasn't exactly overlapped with a period of relative American economic upswing – or at least not for most of its population. Yellen naturally voiced her concerns about inequalities as early as September 2014: yet the central conclusion of that speech was that the poor would be less poor if only they had more possessions, and his tenure at the Fed was yet another episode. of the American melodrama that lasted almost as long as Star Trek: "Rich markets, low incomes". We understand then why Wall Street applauds this Biden appointment: let's not forget that Yellen said in June 2017 that he does not expect another financial crisis in his life.
• Third, while having a Treasury Secretary who knows the Fed thoroughly "has its advantages," central banks and finance ministries are becoming more and more fashionable around the world. Let's think, for example, of Draghi in Italy. But wouldn't Yellen's appointment open the door to the politicized central bank even further? After all, a Fed board member can now consider that not only can the decisions he makes while in office earn him up to $ 250,000 for an after-dinner speech after retirement, but they can also lead them to high office.
• Fourth, instead of sitting as Fed chairman and helplessly wishing the government to do more fiscally, Yellen may now be able to sit as secretary of the Treasury… and want the government to do more fiscally. There is no guarantee that the US House, with its meager Democratic majority, or the Senate, with its two January 5 elections in Georgia, will be willing to provide the huge stimulus the US may need. .
• Fifth, and even more an observation, at least Yellen will know what the Fed will do: nothing. Evans said yesterday that he does not see rates moving until at least the end of 2023 and perhaps even until 2024. It could even be 2033. Nothing would change.

In any case, don't expect a serious discussion of these issues in the financial press right now. The Great Restoration is in full swing * (* legal challenges pending): Laisses les bon temps rouler! Shares have risen; bond yields fell; the dollar fell.

However, sticking to the serious discussion and the topic of politics and central banking, there is news from New Zealand, a small country with big ideas – remember it was the first to start an independent, inflation-oriented central bank. In this regard, the new finance minister Robertson has proposed adding house prices to the mandate of the central bank. In other words, not only should the RBNZ keep CPI at around 2%, it should also keep home price inflation stable.

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The article The five characteristics of Janet Yellen as Biden's Treasury Secretary comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/le-cinque-caratteristiche-di-janet-yellen-come-segretario-al-tesoro-di-biden/ on Wed, 25 Nov 2020 07:00:29 +0000.