Janet Yellen will report to work Monday morning as the most influential force within the U.S. economy. More than any other participant in either the government or the private sector, she has the power and the ability to impact our economy in the near term. All eyes will rightfully be on her.
If President Obama knew how to create jobs and revive the economy, we would know it by now. In Tuesday’s almost forgotten State of the Union address, the president reconfirmed that he doesn’t have an economic plan. Instead, the president has a series of disconnected, one-off initiatives that will mostly just increase government spending, raise the cost of labor and energy, stall economic growth and kill jobs. The only person who can move the needle between now and the November elections is Yellen.
During Ben Bernanke’s tenure, it was clear that he and his Federal Reserve had no-confidence in Obama’s economic policies. Under Bernanke, we’ve had a long run of artificially low interest rates, supplemented by a conveyor belt of money from Washington to Wall Street that was like steroids for the stock market. Many American shareholders benefited from these policies, and the trickle-down effect for the 1 percent is undeniable. As I have said before, the only thing worse than trickle-down is no trickle-down.
But will Yellen show the same levels of no-confidence in Obama’s economic policies as Bernanke? There is no sign that the Obama administration has any new plans or will do anything differently in the months ahead, so will Yellen maintain the status quo? Or will she let nature take its course? A vote of no confidence would keep interest rates low and bond buying at high levels. Oddly, confidence in Obama and his economic team may make Yellen end the party on Wall Street. Yellen certainly doesn’t want to be responsible for making things worse for the president and his Democratic allies, but the bottom line is that she doesn’t have any good options.
Obama’s policies have been great for the 1 percent, and terrible for main street, small businesses and the middle class. But after five wasted years, it is Yellen — not the president — who will have the most influence over what will happen to the economy for the remainder of the Obama presidency. If she has more confidence in Obama than Bernanke did, investors could be in for a shock.
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