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[Nueva York, 23 de Reuters BREAKINGVIEWS]- At first glance, the appointment of Janet Jellen as secretary of the US Treasury is a safe choice. In addition to the post of Chairman of the Board of US Federal Reserve (FRB), he has decades of experience in the financial and economic fields. However, given the high level of “evolving capacity” of Mr. Yelen, you can show that person chose an unexpectedly bold in some situations.
The Wall Street Journal reported on the 23rd that the Byden Democratic Party, which has secured a victory in the presidential election, intends to appoint Mr. Yeren as the next Secretary of the Treasury. If that happens, it is likely to be approved by the Senate. America’s unemployment rate, which was above 6.5% when Yelen was named FRB president, fell 2.5 points during his tenure. He consistently defended the independence of the FRB, and even President Trump, who succeeded President Powell, did not overthrow Yeren.
True, Yelen’s traditional monetary policy management has led to some failures. It has always been seen as a pigeon cult seeking accommodative policies to reduce the unemployment rate, but it has increased rates a total of five times even though the rate of price increase remains low. The reason for this was the idea that the unemployment rate of about 5% was low enough to start raising prices. However, under Powell’s presidency, the unemployment rate has fallen further, but it has not caused a significant increase in prices.
In this sense, Mr. Yelen now looks different from his ex-girlfriend. Since retiring as president in 2018, he has supported Powell’s aggressive policy response, such as lowering the policy interest rate to near zero and establishing a new loan system. Just as the FRB itself has recently reoriented its policy policy and has come up with the idea that it no longer supports rate increases simply because the unemployment rate is low, Yeren is aware of the lower bound on the unemployment rate, which it does not cause price increases. It may have been changed.
Yelen has also changed his attitude towards the budget deficit. In 2017, when America’s debt reached $ 15 trillion, or about 75% of total national production (GDP), it warned that “people could not sleep well.” However, in January this year, just before the new corona virus pandemic occurred, he showed an attitude of acceptance of the expansion of financial spending on issues such as climate change, and has also agreed to increase spending on corona measures.
If so, Yeren may end up trying to clamp down on political measures in a more positive way. In the past, there was only one case in which the president of FRB changed to Finance Secretary Miller, the Carter administration. Miller was far from passing, both as FRB president and finance secretary, because he couldn’t make a decision when a dramatic policy change was needed. Mr. Yeren may have the qualifications to set such a negative precedent.
● Background news
* Mr Byden intends to appoint former chairman of the Federal School Board (FRB) of Yelen as the next Secretary of the Treasury. The Wall Street Journal reported the 23rd as a story of the people affected.
* Mr. Yelen served as former Obama administration-appointed FRB President from 2014 to 2018. Prior to that, he was FRB Vice President 10-14, Federation Governor San Francisco District 2004-10 and director of the FRB in 1994-97. In 1997-99, he was also chairman of the Clinton administration’s Presidential Economic Advisory Committee.
* If Mr. Yeren is designated as the next Secretary of Finance, it will be officially appointed if the Senate gets the most votes.
(I am a columnist for “Reuters Breaking views”. This column is based on my personal opinion).
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