A Woman Virtually Nobody Has Heard Of Is On The Verge Of Becoming The Most Powerful Woman In The World
t’s looking increasingly likely that Ben Bernanke will no longer be the Chairman of the Federal Reserve at this time next year.
In an interview Monday, President Obama said Bernanke has “already stayed a lot longer than he wanted or he was supposed to.”
When asked about his intentions regarding plans for the future, Bernanke has not said much, though the Fed chairman has decided to skip this year’s Jackson Hole summit of world central bankers in August, where he would normally be responsible for delivering the keynote address.
In recent years, the Jackson Hole keynote has been an important stage for signaling big shifts in U.S. monetary policy, a key driver of economic dynamics not only in America, but around the world.
This year, the most important signal from the keynote may not be in the contents of the speech, but in who is delivering it in Bernanke’s place: Federal Reserve Vice Chairwoman Janet Yellen, who is widely tipped as the frontrunner to replace Bernanke when his term expires in January.
Janet Yellen: The next Fed chief?
It’s increasingly looking like Fed Chairman Ben Bernanke is going to step down, and that his replacement could well be his Vice Chair Janet Yellen. Janet Yellen is a tiny lady, 66 years old with short white hair and a slight Brooklyn accent. She has a good sense of humor for an economist. She once joked that all her speeches were so depressing during the onset of the recession that she could see the faces of her audience fall when she would speak.
“In contrast to many people in positions of importance,” says Nobel prize winning economist Joseph Stiglitz, “she has a humility and down to earthiness.” Stiglitz has known Yellen for four decades. She studied under him at Yale in the ’70s. She also studied under Keynesian scholar and Nobel Prize winner James Tobin. As a grad student, her notes with Tobin were so good they were used as study guides by legions of grad students, and she was asked to turn them into a book.
Yellen’s background was “micro-based macro economics,” says Stiglitz. Translation: That’s a very complex view of the macro economy as opposed to a simplistic one. Yellen’s academic work (she’s gone back and forth between government and teaching at Berkeley) has focused on unemployment. In one well known paper, she (co-writing with her nobel prize winning husband George Akerlof) made the then new argument that people’s sense of fairness was an important factor in labor productivity.
Janet Yellen’s ascendancy shows durability of Ben Bernanke’s program
Federal Reserve Vice Chair Janet Yellen’s candidacy for the top spot at the Federal Reserve received a boost last week when 40 of 44 economists surveyed by Reuters picked her as the most likely replacement for Chairman Ben Bernanke when he leaves.
Bernanke’s current term is slated to expire in January, and many Fed observers expect him to announce his retirement early this fall and return to academia.
It’s possible that Bernanke could be reappointed for a third term or that President Obama could nominate another candidate, such as his former Treasury secretary Timothy Geithner or former top economic adviser and Harvard professor Larry Summers. But if Yellen succeeds Bernanke, it would represent a success for Bernanke in his approach to fighting the lingering effects of the recession that hit on his watch.
Yellen, who at 66 is the better part of a decade older than Bernanke, is known as a political liberal and a “dove” who is more concerned about unemployment than inflation. She’s a Democrat, having served on President Bill Clinton’s Council of Economic Advisers and having been appointed by both Clinton and Obama to the Federal Reserve Board of Governors. She is known in her academic research for taking on economic orthodoxies relating to labor and the macroeconomy, especially in her work with her husband, Nobel Prize winner George Akerlof.