Economy & Politics

Biden’s Cabinet: Janet Yellen – the first female finance minister?

The former central banker already advised the then US President Bill Clinton.imago images / ZUMA Wire

It wouldn’t be the first time Janet Yellen has been the first or even the only one. When she was doing her doctorate, she was the only female student among many male fellow students who received their doctorate from Nobel Prize winners James Tobin and Joseph Stiglitz. In 2014, she was the first and so far only woman at the helm of the US Federal Reserve. And now she could become the first US Treasury Secretary, as various US media report.

Janet Yellen is considered a distinguished economist across party lines. Before the 74-year-old can actually become the first US Treasury Secretary, the US Senate must confirm her next year. Should Republicans retain a majority in the Senate, they are more likely to accept Yellen as Treasury Secretary than Elizabeth Warren of the Democratic left, who was also under discussion.

Yellen interviews Yellen

The influential economist was born in Brooklyn, New York, as the daughter of a doctor and a teacher. Even when she was still at school she was ambitious: at her high school she ran the school newspaper and gave the speech at her graduation ceremony. And so, without further ado, she interviewed herself for the school newspaper, as the New York Times writes. Accordingly, she is said to have described herself as a “small figure bent over a desk that is littered with books and pencils”.

Yellen’s curriculum vitae is bursting with elite universities: she graduated summa cum laude from Brown University, received her doctorate from the no less renowned Yale University, only a little later from Harvard University, the London School of Economics and in To teach Berkeley. At the beginning of her academic career she actually wanted to study philosophy, but then switched to economics.

Today, Janet Yellen is seen as someone who works based on evidence and is willing to compromise. Her doctoral supervisor Tobin once described Yellen’s relationship with her husband – Nobel Prize winner George Akerlof – as saying that Akerlof was constantly developing new ideas and Yellen was putting these ideas into an academically plausible form.

Career at the central bank

Yellen began his career at the US Federal Reserve in 1977. In 1994 she became a member of the Board of Governors. During her time there, she was involved in laying the foundations for the Fed’s inflation target. This was followed by the post of President of the Federal Reserve Bank of San Francisco, and later the position of Vice President of the Fed.

In 2014, Barack Obama nominated her as Fed President – her most important post to date. Initially, her term in office stood for a loose monetary policy with extremely low interest rates. The Fed later raised interest rates to prevent the US economy from overheating and to return to normal monetary policy. In the 2016 election campaign, Donald Trump vehemently criticized Yellen’s course and promised to fire the Fed President should he become president. Yellen stuck to her policy, unimpressed.

After her first term in office, Trump did not nominate her again. A report by the Washington Post caused a stir, according to which Trump is said to have commented several times about Yellen’s height – she is simply too small to run the central bank with her height of 1.60 meters. She headed the Federal Reserve for four years, making her one of the most powerful people in the US economy.

The job of finance minister would not be Yellen’s first job in politics. As chief economic advisor to US President Bill Clinton from 1997 onwards, she played a key role in his economic program. Yellen has shown far-sightedness more than once: in 2005 she warned of the danger of a real estate bubble, and in 2008 she was the first US central banker to utter the word “recession”.

Tremendous economic challenges

One of Yellen’s special topics has always been unemployment – a topic that has become more explosive due to the Corona crisis. Millions of Americans lost their jobs during the pandemic. The crisis hit the US economy hard. In the second quarter of this year, the US economy saw its gross domestic product plummet by 31.4 percent – the sharpest drop on record. Although the economy has recently recovered, the US Federal Reserve has already warned that the further development of the economy depends heavily on the development of the corona pandemic.

In an interview with Bloomberg, Yellen also spoke out in favor of bringing the infection level under control first. That is good for both health and the economy. In addition, support for the economy is needed – from the monetary and tax policy side.

So far, Yellen has not commented on the reports that Biden wants to make her finance minister. When asked in an interview with Bloomberg in October if she would be willing to take on the post of Treasury Secretary under President Joe Biden, she acted humbly as usual. Thank you for the question and the associated idea that she could do this job, she said with a slight smile. But she has nothing to say on the subject.

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