January 7, 2014

Janet Yellen - The first woman to head US Federal Reserve

Currently vice-chairman of the US Federal Reserve, the central reserve bank of America, Janet Yellen has been nominated to head the bank at a most critical period of economic uncertainty in US history, succeeding current chairman Ben Bernanke, father of the stimulus theory that apparently has taken the country out of the great meltdown crisis.
NEW DELHI: The US Senate has confirmed Janet Yellen as the next head of the Federal Reserve, the American central reserve bank, in an environment of hope emerging after a historic economic meltdown and the uncertainty of the consequences of the currently unwinding stimulus package. Meeting after the winter break on Monday, the upper chamber passed her nomination without obstacle - 56 to 26- making her the first woman to head the central bank in its history, succeeding current chairman Ben Bernanke.

Yellen, who was no 2 in the hierarchy of the Fed, takes office on February 1 next. Hailing from a Jewish family in a Brooklyn, she is a product of Yale University, and married to a Nobel prize winning economist and professor at University of California , George Akerlof. She, 67, had also served as the chairman of former President Bill Clinton's economic advisory council.

The change of guard comes at a critical stage in US economy recovering from the devastating slump with the innovative scheme of an easy-money policy which saw the treasury launching bond purchases in trillions. Yellen will head the slow dismantling of the support system which can have unknown consequences. Federal vice-chairman since 2010, she was an ardent supporter of the bond scheme. With her expertise to tackle unemployment, and transparency in thinking, Yellen is not aligned politically. She will be the most powerful economic policy-maker in the world as Bernanke retires.

According to Lawrence Summers, an economic expert and former adviser to President Obama, the novel remedy of growth under credit will lead to the same problems of excess credit it is trying to solve in the original place, or even much greater bubbles. Instead, like many others, he argues that economic policies should aim at creating genuine demand in the economy. Else, America is heading for a still worse disaster, a legacy Obama will hand over to his successor! (ALSO READ: Strategies for sustainable growth by Lawrence Summers)

-Editor

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