A vote on Janet Yellen’s appointment as the next Federal Reserve Chairperson is expected Thursday, but the ritual flogging has already yielded some telling soundbites. Yellen emerged from last week’s initial hearings with talons bared, shaming Congress for their economy-stifling austerity measures.
To members of Congress who criticize the Fed for its aggressive stimulus, Yellen had this to say:
Fiscal policy has been working at cross purposes to monetary policy [. . .] We are worried about a fragile recovery, and a more supportive fiscal policy, or one that at least had less drag, that did no harm, would make life easier.
Yellen blames Congress’ ineptitude and infighting for the stifled economic recovery. Her stance is similar to that of current Fed Chief Ben Bernanke, who blames Congress’ failed fiscal policy for the economy’s sluggish growth.
Like Bernanke, Yellen is a well-documented “dove” when it comes to monetary policy. Rather than take a “hawkish” attitude toward inflation, she believes a little inflation is a good thing for labor markets. Thus aggressive stimulus is likely to continue under her watch.
This is good news for housing markets. Jobs create demand for real estate. Despite rising prices in California, it is now widely agreed that our “recovery” has been primarily fueled by overbidding cash speculators. We need more jobs and higher wages to create true end-user demand.
And Yellen’s top priority is job creation — as it ought to be. Odds of getting our fiscal house in order are slim. But at least the next Fed Chief knows how to deliver a well-deserved browbeating.