What Janet Yellen’s term means for Canada and the world


Who is Janet Yellen?
Whenever there is a new chairperson of the US Federal Reserve Board, we find there is value to investors in finding out what makes that person tick. What have they said in the past that predicts tendencies changes in the future? Do they have any heart-felt convictions about Fed policy that we should know about? After all, this person will be the most powerful financial force on the planet for the foreseeable future. If there are going to be any major alterations in the way that the Fed operates, we should at least be aware that those changes may be coming.


A Track Record of Failure
Sometimes, of course, as in the case of Alan Greenspan, what he said in the past – what we thought his convictions were – turned out to have no bearing at all on what he did. The only clue that one could glean from his past was that he was a terrible economic forecaster – one of the worst in the business as we well recall – and sure enough, he just kept doing the wrong thing. Bernanke thought that he was an expert, the expert, on the Great Depression, and managed to bring the US close to another depression. Unfortunately, when we look at Janet Yellen, we see a nice person – with all that that word implies – but one who does not strike us as likely to be any sort of critical leader. We reserve the right to be wrong, but that is the way that we see it.