‘It Was The Core Of My Existence’: Yellen’s Farewell Interview With CBS

Ok, I’ll say it: bless her heart.

Janet Yellen has been variously lampooned over the course of her tenure as Fed Chair. Depending on who you’re inclined to listen to and how predisposed they are to conspiracy theories and/or outright mean-spirited derision, Yellen is either responsible for blowing egregious asset bubbles and thereby imperiling the entire global economy with reckless abandon, part of a nefarious cabal of global bad actors hell-bent on exacerbating inequality and forestalling the epic plunge into creative destruction that’s desperately needed to reset the system and restore markets to some bygone era of efficient functioning, or somewhere in between.

Meanwhile, back in a fun place called “reality”, Janet Yellen is an old woman, a public servant, and an economist who, by virtue of being an economist, is predisposed to doing economist things, which in the modern world invariably involves participating in the perpetuation of group-think that, while hopelessly flawed, is not in fact indicative of some kind of underlying Dr. Evil-ish plot.

The idea that an old woman who wouldn’t be at all out of place in the cookware aisle at the local Target or maybe wandering aimlessly through Hobby Lobby is somehow out to get you is of course entirely laughable, so hopefully, now that she’s out to pasture, we can all stop pretending like she’s some kind of Austin Powers villain.

To be sure, she’s left Jerome Powell with one hell of a tough job. This poor fucker is staring down resurgent inflation just as the lunatic who appointed him is piling fiscal stimulus and deregulation on top of an overheating economy, which means that here shortly, Jay is going to need to decide whether to hike aggressively to curb inflation pressure, or risk sticking to a gradualistic approach as the curve aggressively bear steepens on him. That, against a backdrop of ebullient public sentiment about a stock market rally that is stretched to the breaking point. Good luck with that Jerome, you’re going to need it and when you either i) panic hike the economy into recession, or ii) sit on your hands as the curve steepens and the bond trade unwinds, no one is going to want to hear your excuses about how this is all the fault of the old woman holding up the line at the Teavana store by trying to use three coupons she clipped out of a mailer.

Anyway, Yellen gave a farewell interview to CBS and if what you want to do is make fun of it, well then go ahead because she accidentally gives you plenty of ammunition. But at the end of the day, we wonder if, when you retire from your job, you’ll be able to say what Yellen said when asked how she felt as she literally boxed up her belongings after being essentially fired by Donald Trump. To wit:

I really love this job. It has been the central focus of my life.  You know, I enjoy time with my family outside of work.  But the work I do here is the core of my existence, and it’s been my identity.

Via CBS

It’s not a voluntary departure; she was a frequent target of Donald Trump during the 2016 campaign. (“Janet Yellen of the Fed … The Fed is doing political — by keeping the interest rates at this level”).

Later, the president praised her. (“Janet Yellen, a wonderful woman who has done a terrific job.”)

Braver noted, “But he didn’t reappoint you.  Were you disappointed when you learned that you were not going to get a second term, as almost everybody else has?”

“Right, so it is common for people to be reappointed by presidents of the opposite party,” Yellen said. “I made clear that I would be willing to serve another term, and so yes, I do feel a sense of disappointment.

“But look, I’ve been in high level positions in the Federal Reserve for many years, where I think I’ve had a seat at the table to make the arguments that I thought needed to be made and to advocate for good policy.”

Yellen, a Democrat, will be succeeded by Jerome Powell, a Republican, but someone who has been described as her protégé.

Braver said, “People say that you’re supportive of him.  Is that true?”

“I am supportive of him.  I’ve worked with Governor Powell for five years, very constructively. He is thoughtful, balanced, dedicated to public service. I’ve found him to be a very thoughtful policymaker.”

Still, Yellen fears that some of the policies she championed are in peril.

The House has passed a bill that would curtail the Fed’s independence when it comes to setting interest rates; and there is also talk of rolling back regulations the Fed imposed on banks after the economic collapse.

“They are now much safer, much sounder, and much better at managing their risks,” she said. “And it would be a grave mistake to roll that back.”

And on Yellen’s last day in office, the Fed flexed its muscles, slapping Wells Fargo with unusually harsh penalties for “widespread consumer abuses.”

As for whether Yellen’s view that the stock market (which plummeted on Friday) has been too high in recent months:

“Well, I don’t want to say too high.  But I do want to say high. Price-earnings ratios are near the high end of their historical ranges.  If you look at commercial real estate prices, they are quite high relative to rents.  Now, is that a bubble or is too high?  And there it’s very hard to tell.  But it is a source of some concern that asset valuations are so high.

“What we look at is, if stock prices or asset prices more generally were to fall, what would that mean for the economy as a whole?  And the financial system is much better capitalized. The banking system is more resilient.  And I think our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system.”

“We’re in the ninth year of a recovery; can it really keep going like this?” asked Braver.

“Yes, it can keep going.  Recoveries don’t die of old age!”