If you read my column, know me, have spoken to me or maybe just bumped into me, you will know what I hold a special place in my heart for Ben Bernanke, chairman of the Federal Reserve. The former Princeton economist took control of the most important bank in the world in early 2006, when both the American and global economies consistently made headlines for growth and prosperity.
Almost eight years later, much has changed. Gone are the days of middle school dance jams "Laffy Taffy," "Miss New Booty" and - weirdly, my camp roommate's ringtone for his parents - "I'm 'n Luv (Wit a Stripper)." More importantly, the global economy experienced its worst recession in decades. A U.S. housing collapse, an international liquidity crisis and Greek debt default all took their toll. Bernanke led the country - and really, the world - through innovative monetary policy and levelheaded guidance, becoming the darling of Wall Street in the process.
Thankfully, the economic winds have shifted. Though the Eurozone remains a bit of a mess, our own economy has rebounded and landed on more solid footing. Despite Bernanke's work, it is time for change.
And so President Obama - harbinger of "change" the world over - nominated Janet Yellen to be the Chair of the Federal Reserve last month. If confirmed, Yellen would be the first woman to hold the Fed's top spot in its hundred-year history. Though many believed former Deputy Treasury Secretary Lawrence Summers would receive the nomination, liberal Democrats pushed back and eventually forced Summers to withdraw his name from consideration, and perhaps for good reason.
Under Bernanke's reign as Chairman, the Federal Reserve has taken on a public persona that it never had before. Fed press releases used to be mundane, usually stating small adjustments in interest rates. Now the press and Wall Street hang on every word. Summers, despite his experience in academia and politics, has received a reputation as a public commentator. You may have gotten a taste of his demeanor in "The Social Network," when Summers - who was president of Harvard while Mark Zuckerberg was creating Facebook - asks the Winklevoss twins if they are trying to sell him a Brooks Brothers franchise.
Yellen, however, is a product of the Federal Reserve System, having worked there on-and-off since she first served as an economist for the Board of Governors in 1977. More recently she has served as President of the Federal Reserve Bank of San Francisco and Vice Chair of the Federal Reserve System - essentially Bernanke's second in command.
Yellen has a proven track record within the Federal Reserve and is expected to run the bank in the same vein that Bernanke has. With the economy rebounding, it is time for the Federal Reserve to fade into the background of economic policy. Wall Street has come to rely on the Fed's quantitative easing (QE) program to bolster returns, but a stronger economy means it's time for the training wheels to come back off - or at least for the Fed to stop pushing.
Yellen's confirmation hearings have been going on for the past week or so, where Senators have been able to grill her to their hearts' content. Yellen has signaled that she has no immediate plans to "taper" QE and that the economy does not have an "asset bubble." Given her economic track record and already integral role in Fed policy, Yellen should be confirmed almost automatically. In my opinion, the best part of any hearing related to the Federal Reserve is finding out just how clueless most of Congress is when it comes to economic policy. Least favorite part? "Why don't we tie the dollar to gold again?"
Walt Laws-MacDonald is a junior who is majoring in quantitative economics. He can be reached at Walt.Laws_MacDonald@tufts.edu.
