Serious Question, Janet Yellen Edition
In spite of a sustained lack of inflation, a large, sustained gap in the Civilian Employment/Population Ratio, an abiding lack of post-recession growth domestically, and significant underperformance (old, new, [PDF] and overall) internationally, the Fed appears prepared to raise interest rates this year. Which leaves me now wondering:
With the possible exception of Robert, is there any former colleague/roommate/coworker of whom Brad DeLong has spoken highly who is worth the trouble of paying attention to when they have a chance to do something in government?*
My top-of-the-head list is:
- Lawrence “Larry” H. Summers (the RoboQB of the Econ field, in more ways than one)
- Tim Bloody Effing Geithner (all links but one to Brad in his post-Chief Internet Geithner Apologist days)
- Andrei Shleifer
- Christina Romer (though I’ll be the second or third to stipulate that It Wasn’t Her Fault; see above), and, now,
- Janet Yellen
What good is alleging that you have sharp, respectable people who Know What to Do if they then Don’t Do It? When the perpetual answer you get when they screw up is a variation on “You said you regretted not doing more. What do you regret not doing?”
*Robert isn’t and hasn’t been, so far as I know, in a position to make policy. So whether he counts as an exception is left as an exercise.
Well, the previous post suggests that lack of jobs is NOT the reason for the low Employment-to-Population ratio.
Skimming your links and as a long-time reader of “Grasping Reality”, I see courtesy and empathy being extended to, e.g., Mr. Geithner, but not apologetics – which I define as defense of an ideological position by any means necessary. It seems to me that your argument is that Prof. DeLong was not as rude to various people as you think they deserved. You are entitled to that opinion, but it is not the sort of post that gets us anywhere.
Well, Janet Yellen is certainly the one that is in a powerful position right now, maybe the most powerful economic decisionmaking position there is with the possible exception of the US president. Even so, one must recognize that the FOMC is a collegial body with competing factions. It is well known that Yellen is at one end of the political/ideological/policy spectrum on that body, which votes on policy. She is powerful, but not all powerful, and we do not really get the inside story until much later regarding exactly how hard the fighting is or has been, although one gets indicators from occasional speeches by various figures.
So, some of her worst critics and strongest hawks have just departed, notably Fisher and Plosser. OTOH, Kotcherlakota is also leaving, who was expected to be a hawk, but has turned into the uber dove. Not clear what the views of their predecessors are.
As it is, the big question is not this year but next month, which many have been calling for. It may be that the Chinese devaluation will give her the ammo to hold off the hawks, who have clearly and openly been push push pushing for an interest rate hike no later than yesterday. How long she can hold them off is anybody’s guess, but I would suspect that seeing her mentioning the possibility of near term interest hikes does not mean she is supporting those. Her speeches carefully represent consensus positions, and she does not control those.
IMHO the reason that the Fed should raise rates ISN’T because of inflation* fears or that their hyper accomodative policies have done their job. Quite the reverse, monetary policy has done LITTLE to goose the economy and much to increase financial “industry” at the expense of the productive economy and increase the concentration of wealth in this country during the “recovery.” Instead it has turned into a mirror version of “trickle down economics” except that it is is advocated by those of a slightly more liberal slant.
*here defined as an increasing the prices of the items that make up the CPI, because the price of equities and financial instruments has sure gone up.
I don’t do anything so I will never influence policy for good or ill. The question left as an exercise will be left that way forever, because I never exercise.
I don’t think that Geithner was ever Brad’s “colleague/roommate/coworker”.
For the others, in this century (that is post Glass-Steagall) you have to stress it wasn’t her fault and, to a lesser extent, it wasn’t his fault either. Romer fought and fought for more stimulus and more radical QE (or more radical talk about QE). Yellen has been relatively an uber dove and also the best forecaster on the FOMC. Shleifer was an emigre advisor who brought Occam’s razor to a gun fight. Summers came around and has been arguing for more stimulus for years.
I have edited this comment to reduce rudeness, but I can’t resist typing that, while the green lantern theory of the presidency is odd, the green lantern theory of the CEA chair is odder.
If no one else says so, it is good to read a post of yours again.