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Showing posts with the label Monetary Policy

Yellen at the Senate Banking Committee by Kari Nelson, Impact Investing Intern, University of Virginia

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On July 13, the Senate Committee on Banking, Housing, and Urban Affairs met in open session with the Chair of the Board of Governors of the Federal Reserve System, the Honorable Janet L. Yellen, for“The Semiannual Monetary Policy Report to the Congress.” I attended this hearing and this blog post shares my reaction as well as some analysis.
Despite the fact that the hearing was supposed to be about monetary policy, the Senators mostly questioned Yellen about regulatory issues. Republicans have been pushing for widespread rollbacks of Dodd-Frank financial regulations, so this is not surprising. This regulatory theme was apparent from the beginning, with Sen. Mike Crapo (R-ID), the Chairman of the Committee, asking Yellen to affirm that she believes Congress needs to act on some areas of financial reform and that the Fed would work to make suggestions to the Committee, both of which Yellen readily agreed to. The ranking Democrat, Sen. Sherrod Brown (D-OH), quickly responded by pushing …

Five Key Takeaways from Yellen's Monetary Policy Testimony

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Federal Reserve Chair Janet Yellen testified on Capitol Hill on Wednesday and Thursday.
She appeared before the House Financial Services Committee and the Senate Banking Committee. We attended both hearings. Here are the key points:

1. An undercurrent of protest from both the left and the right (Google #whoserecovery) is beginning to have an impact on monetary policy. See the photo above of protesters at both hearings. We have issues with both the left and right wing versions. The right is simply crazy. The left is financed by labor unions. I can guarantee that none of the black folks in the photo of protestors at the hearings below are well paid. Their labor union managers, most of whom are white, are. (Can you say rock and a hard place?)

2. At the start of the Senate Banking Committee hearing, Senate Banking Committee Chairman Richard Shelby unveiled a letter from 30 economists who support implementation of the Taylor Rule, a mechanical approach to monetary policy that…

An unprecedented move by the FED

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In an unprecedented move, the Federal Reserve tied monetary policy to a specific social metric, an unemployment rate of 6.5%. Given stubbornly high unemployment levels, this new monetary policy target is entirely appropriate. Looks like its working.

Mr. Bernanke appears to be willing to risk his reputation as an inflation fighter in order to lower the unemployment rate. I think the Bernanke Gambit is good news for the unemployed and good news for the country as a whole.

Bernanke signaled that bondholders would no longer dominate monetary policy considerations. This is for their own good, since they will benefit, over the long term, from a fairer and more stable economy.

The majority of American citizens are bond sellers, not bondholders. In a downturn, government spending, required in order to get the economy out of a recession, is financed through the creation, by fiat, of new money. The resulting increase in the quantity of money gives rise to inflation, assuming the quantity of goods …

Humphrey Hawkins Hearing on Monetary Policy(Jui Kai Li)

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On July 21st , Federal Reserve Chairman Ben Bernanke testifies before the Full committee of the House Financial Services Committee for his semiannual Humphrey Hawkins Hearing on Monetary Policy.

Mr. Bernanke’s testimony is summarized as follows and copy of the written statement is available on the committee’s web site at:
http://www.house.gov/apps/list/hearing/financialsvcs_dem/fchr_072109.shtml


Mr. Bernanke’s early responses to the Wall Street Journal (wsj) were cited by Barney Frank (D., Mass.), the Committee’s chairman as his opening statement. Mr. Bernanke’s quotes on the WSJ also became some of the lawmakers concerns.

Expansion of GAO audit
According to the WSJ’s article “Bernanke Heads to Congress Battling Calls to Tame the Fed”, Mr. Bernanke strongly opposed the proposal to audit the Fed, calling it "self-defeating and dangerous." He said that the risk is that if investors see the Fed facing new political oversight, they will doubt its ability to take unpopular steps to fi…