Janet Yellen's Final Exam

George Yacik - INO.com Contributor - Fed & Interest Rates

Although he professes to “really like her a lot,” President Trump appears to have made up his mind that that the next chair of the Federal Reserve won’t be the incumbent of the past four years, Janet Yellen.

On Tuesday, according to media reports, the president asked Republican senators for a show of hands on whether they favored current Fed governor Jerome H. Powell or John B. Taylor, the Stanford University economics professor and frequent Fed critic. Results of the informal vote weren’t disclosed. On the same day, the New York Times ran an article comparing the “finalists” for the Fed chair position, mentioning only Powell and Taylor, even though the White House has said Trump is considering three additional candidates, including Yellen.

So it now looks like it’s a two-man race between Powell and Taylor. Trump has promised to make an announcement any day, at least before his trip to Asia at the end of next week.
Regardless of who he chooses, it’s certainly an appropriate time to review Yellen’s tenure as Fed chair, either as a historical exercise or as an indicator of what we can expect for the next four years in the event she is reappointed. Let’s look at some of the main points. Continue reading "Janet Yellen's Final Exam"

Hand Off to a New Fed Chair is Well Timed

It is as notable as a 2nd term president handing off the big problems to the next guy, as George Bush did with Barack Obama in 2008; the changing of the guard at the Fed, that is.

Alan Greenspan oversaw the making of a stock bubble in the final phase of the great bull market ended in 2000.  He then instigated a credit bubble, which launched a housing bubble, made the credit hopped consumer feel wealthy and oh yes, built unsustainable distortions into the system through diced and sliced debt derivative vehicles of all kinds.

Then in 2006 he deftly made the hand off to Ben Bernanke.  Bernanke then dealt with the Maestro’s second aftermath as it began cropping up in 2007 and now, nearly 4.5 years into a cyclical bull market that has another 6 months or so to run if it is to match the two previous cycles (not a given), it is time once again for a hand off. Continue reading "Hand Off to a New Fed Chair is Well Timed"