Whether you liked Alan Greenspan or Ben Bernanke or not there is one thing that could be said about our most recent chairmen of the Federal Reserve. They didn’t wear their political ideology on their sleeve. The two most recent former chairmen of the Federal Reserve kept a non-partisan stance keeping in the tradition of that institution. Both men served under both Republican and Democrat administrations.
Janet Yellen simply seems to be an extension of the Obama administration, and in her short time as Fed chair she has already spoken out against income inequality which has lead some to write that she is in danger of becoming a partisan hack. She also weighed in on school finance in that same speech. Michael Strain of the American Enterprise Institute recently wrote an op/ed for the Washington Post.
Well. I think it is appropriate to ask whether the Fed chair should be expressing concern over whether income inequality is un-American. And to answer: No. The Fed chair shouldn’t sound like a left-leaning politician opining about hot-button political issues.
After nodding towards the (correct) argument that inequality of outcomes can contribute to economic growth, Yellen — who, despite this misstep, I forecast will be an outstanding Fed chair — focuses on how inequality is a growing threat to opportunity. “To the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality,” she said.
Strain’s forecast is incorrect, she’s off to a poor start to ever be considered “outstanding” as a Fed chair. It has been announced that Yellen is meeting with a coalition of left-leaning groups who seek to influence monetary policy. They want the Federal Reserve focused on lowering unemployment.
Conservative groups, like American Principles in Action, are concerned with the Fed Chair appearing to engage in a highly political discussion regarding monetary policy with political interest groups.
“American Principles in Action is extremely concerned with Fed transparency and the continued low interest rate policy,” said American Principles in Action’s Director of Monetary Policy, Steve Lonegan. “Our measured work shows that the Fed’s policies are creating a barrier to job creation and these policies have the unintended consequence of exacerbating income inequality.”
Lonegan continued, “To our knowledge no Federal Reserve Chair has ever agreed to meet with representatives of an extreme political view. Ms. Yellen is venturing far into politics, and that is deeply concerning.
“We encourage the Fed Chair to consider all relevant points of view on this important issue.” Lonegan concluded. “APIA and other like-minded groups would like to request a similar meeting with Yellen, and hope that she is open to all political views, not just those from the far-left.”
If Yellen is gong to meet with political interest groups she needs to incline her ear to all groups otherwise she deserves the title of partisan hack.