Janet Yellen: The future 'keeper of the White House's coffers?

The powerful man in the financial world

The US stock market has recovered strongly when there isCovid-19 vaccine, jumped to a record high on the news that Janet Yellen was nominated by Joe Biden to head the Treasury Department. If approved by the Senate, Ms. Yellen, 74, would be the first American woman to hold the important position considered the "treasurer" of the White House.

Mr. Joe Biden nominated Ms. Janet Yellen to lead the US Treasury Department for the new administration. Photo: WSJ

Janet Yellen has been a familiar face in American politics for more than two decades. She has held many important economic and financial positions in the administrations from Bill Clinton to Barack Obama. She is credited with helping to provide solutions for the economic recovery after the 2007 financial crisis and the recession that followed.

The position that brought her to the pinnacle of power “below one person in ten thousand people” was when she took over the management of the FED under President Barack Obama. At that time, Yellen was among the top most powerful women in the world. As Chair of the US Federal Reserve, Ms. Yellen won her support from Wall Street to ordinary workers because of her policy of prioritizing fairness and equality. For a woman who plays a decisive role in the cash flow and financial stability of the world’s number 1 economy, she must have an illustrious record.

Janet Yellen was born into a middle-class Jewish family in Brooklyn, New York, in 1946. Her father, a doctor, and her mother, a teacher, both lived through the Depression, so Janet heard many stories about it. She also saw Brooklyn dockworkers and poor people coming in and out of her father's clinic. "I understood the impact that unemployment could have on people," she said. Perhaps that's why she pursued and quickly found her passion in economics.

During her school years, Janet Yellen proved her intelligence and outstanding ability by winning all the school awards, being on the honor roll, and becoming editor-in-chief of the school newspaper. She graduated with a bachelor's degree in economics from Brown University in 1967 and went on to receive a PhD from Yale University in 1971. She then became a professor at several prestigious universities, including Harvard, the London School of Economics, and the University of California at Berkeley. Becoming an economist at a time when very few women participated in the dry and stressful field, Janet Yellen still rose to become a powerful person in an environment dominated by men.

Janet Yellen made history as the female Chair of the US Central Bank under President Barack Obama. Photo: AP

Immediately afterMr. Joe BidenAnnouncement of Janet Yellen's nomination as Secretary of the Treasury in the new administration, investors in the US financial market are optimistic. The market believes that Ms. Yellen's experience working at the central bank will play an important role in helping the US overcome the economic difficulties caused by the Covid-19 pandemic. Colleagues in the financial world have also praised and expressed their expectations when she holds the new position.

Randall Kroszner, an economics professor at the Chicago School of Business, said people from both parties respect Yellen because she is “a straight shooter.” Olivier Blanchard, the influential former chief economist of the International Monetary Fund, described her as having “the perfect blend of expertise.” David Blanchflower, a former member of the Bank of England’s monetary policy committee, compared Yellen to a “tiger,” but also a compromiser “everyone likes.” He predicted that she would usher in a period of “serious and calm economics.”

“Stable, experienced people are taking over after four years of complete chaos. Did Janet Yellen do anything unusual? Absolutely not.”

David Blanchflower

Great responsibility

Over the years, the office of Treasury Secretary has expanded to take on more roles than it was created in 1789. If confirmed, Ms. Yellen will undoubtedly inherit one of the most “demanding” positions in the incoming administration and face many “unique” economic obstacles. In 2021, an unprecedented array of tasks awaits, including Covid-19 relief programs, a proposed carbon tax, and continuedprotracted trade warwith China...

Ms. Yellen also served as a senior economic advisor in the Bill Clinton administration. Photo: Getty

With her ability to withstand pressure and keep her decisions fully informed, even in the face of serious uncertainty, Yellen is expected to be the “pillar” of the US financial system during an unprecedented and complex period in history. She will advise the President on how to spend money, but the final decision depends on Congress and the White House. She will also act as a diplomat, connecting with the Treasury Secretaries she knew from her time at the Fed.

One of Yellen's outstanding abilities is prediction. In 2007, when most of her colleagues at the FED believed that the US bad debt crisis had passed, Yellen was skeptical, warning that the specter of recession was looming ahead. And recession happened, causing turmoil in the US, affecting the world. In the current new context, the heavy responsibility of a US Treasury Secretary is not only managing the government's tax revenue, all the state's "public debt" but also supervising financial and monetary activities, which means being sensitive to reforming the economy. According to the US press, she and her husband, George Akerlof, are both Keynesian economists. Followers of this school believe that economic markets are fundamentally flawed and need government regulations to operate smoothly.

One of the duties of the US Treasury Secretary is to enforce foreign sanctions. US-China tensions have escalated sincePresident Donald TrumpTrump took office in 2017. Actions he has taken against China include imposing high tariffs on Chinese goods and restricting access to the US market for some Chinese companies. Yellen has acknowledged concerns about China's industrial practices in the past, but her policy stance on Beijing is less well known. However, economists in Washington see her as a supporter of free trade and multilateralism - a sign that she, like many on Mr. Biden's team, will be a moderate voice.

President-elect Joe Biden listens to Janet Yellen speak at The Queen Theatre on December 1, 2020 in Wilmington. Photo: AP

“As Secretary of the Treasury, I will work every day to make that dream come true for everyone.”

Janet Yellen

For her part, despite returning to politics again at the age of 74, Ms. Yellen has shown a willingness and seems to have never given up on the financial sector that she has pursued for many years. “We are facing enormous challenges. To recover, we need to revive the American dream – a society where everyone can reach their potential and dream even bigger for future generations,” Ms. Yellen wrote on Twitter in her first post after receiving the nomination from Mr. Joe Biden. “As Secretary of the Treasury, I will work every day to re-create that dream for everyone.”