Janet Yellen is one sharp senorita – but boy has she got a tough job to do.
The Federal Reserve Chair has got to contend with a republican-controlled Congress who doesn’t think she got the memo about how much better the economy has been doing lately. So they’re going to pressure her to raise interest rates. But she isn’t convinced that the damage that the American family has healed from the damage the crisis did. In other words, she is diametrically opposed with lawmakers who demand so much transparency from her that they are trying to audit the whole entire Federal Reserve system if they don’t get their way.
Yelling for Yellen
Secondly, she’s got to read the tarot cards and figure out if our economy really has bounced back as much as the Republicans think. The numbers don’t always tell the whole story. It seems as if the economy has rebounded from lackluster growth rates of a few years ago. But even if the US is going strong, we are not insulated from the perils of Europe which is on its way to becoming Japan, Japan who remains in a prolonged recession without any hope of getting out of it, China accruing debt at alarmingly high levels, and the other emerging markets which are on their way up (kind of) but not in a totally linear way. She’s got to figure out if the Fed should hike rates for the first time in 8 years, and in the meantime there has been more than $3 trillion of liquidity injected into the system and interest rates held down at next to nothing.
Here’s the key to Yellen’s decision on whether or not to maintain her dove-like stance and keep rates low. Yellen is an advocate of the American family. Unemployment in our country seems to be steadily creeping downwards. The January jobs report showed that more than 1 million new jobs have been created in a three month period, but what does that really mean for the average American? It’s not clear. In fact, data suggests that people are taking low paying jobs to put bread on the table. Underemployed is better than unemployed, but it just doesn’t seem like it’s enough improvement to warrant a rate hike.
That’s why I’m yelling for Yellen. In light of this tough decision, she’s got to have someone in her corner.
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