The Senate has confirmed Janet Yellen as the new chair of the
Federal Reserve in a 56-26 vote. While some media outlets are
quick to celebrate the first female appointee to this position,
Reason TV talked to at least one person who sees little to
celebrate when it comes to Yellen’s views on monetary policy and
quantitative easing.
Jim Bruce interviewed Janet Yellen while producing the
documentary “Money for Nothing: Inside the Federal Reserve,” and
says the following in an interview with Reason TV (featured below;
relevant bite starts
at 7:30 mark):
I’m concerned that Janet Yellen is going to follow the policies
of Ben Bernanke. It’s going to be more of the same. I think she
really has all the intentions you want. She wants to help the
average person. But I think that her idea is that more quantitative
easing, more periods of zero percent interest rates, is going to do
that.
Yellen has said as much throughout her confirmation hearings,
stating that near-zero interest rates remain a necessity until
capital investment has strengthened, while also arguing that high
interest rates would be, in a sense, just as “artificial” as
current interest rates. Via
the Washington Post:
“Isn’t the zero lower bound in some ways also artificial?” asked
[Sen. Chuck] Schumer (D-N.Y.). “Isn’t QE2 just another way to
influence interest rates. If you didn’t do QE, wouldn’t interest
rates be artificially high?”Yellen clearly agreed, and offered what is surely the wonkiest
answer in the entire hearing.
“If you judge what’s high or low by the needs of the economy,
people sometimes talk about a concept called equilibrium real
rate,” Yellen said. “When there’s a lot of saving and not very much
investment, which is where we are now, the natural forces of the
economy are pushing interest rates down. It is these forces we’re
trying to cope with.”Against that backdrop, what would happen if the Fed hiked
interest rates?“If we were to try to push rates up when the economy has that
much saving and such weak investment, we would truly harm the
recovery. Having pushed rates to zero, by many estimates we would
want to have negative interest rates. Of course we can’t achieve
that. As you indicate, that’s why we’re trying to push down
longer-term interest rates.”
Watch Reason TV’s interview with Jim Bruce below, and check out
Bruce’s film here.
from Hit & Run http://reason.com/blog/2014/01/06/senate-confirms-janet-yellen-as-new-fed
via IFTTT