Screen Shot 2014-07-16 at 11.37.34 AMBefore you watch the video, I want to highlight an excellent article published this morning by Yves Smith over at Naked Capitalism titled, Yellen Tells Whoppers to the New Yorker. The title doesn’t do justice to the powerful and scathing critique of the fraud that is the current Federal Reserve Chairwoman. In a nutshell, the article exposes how Yellen’s acting routine is worthy of an Academy Award. In her role, she plays a caring, sweet, grandmotherly type figure all concerned about the poor and middle-class, when reality points to a career as a staunch, frontline protecter of the bankster oligarchy.

From Naked Capitalism (for background, much of the article is criticism of a propaganda piece on Yellen recently published by the New Yorker):


In other words, readers are supposed to take Yellen’s claims at face value, when the Fed’s policy of saving banks by goosing asset prices and convincing itself that ordinary people would benefit because the “wealth effect” would lead to more consumption. The result has been widening income and wealth disparity and corporate profits at record levels as a percent of GDP, meaning workers are getting less than they’ve ever gotten. Yellen as the head of one of the regional Federal Reserve Banks and member of the FOMC can’t escape from responsibility for these policies. And there’s no evidence of meaningful opposition; unlike some Federal Reserve presidents, like Charles Plosser and Dick Fisher, who have often taken issue with the Fed’s official position in their speeches, Yellen made little use of her bully pulpit at the San Francisco Fed.

Although these differences are significant, Lehmann overstates the dichotomy between monetarist followers of Milton Friedman and American Keynesians. In particular, Keynes himself debunked the “loanable funds” fallacy, that putting money on sale would induce businesses to take advantage of the cheap price and borrow and invest (the only ones that do are ones where the cost of money is a major product cost, and that’s financial players, who as we have found, plow it into speculation). Yet you see defenders of the Fed’s actions (usually making the argument that QE was beneficial, if less so than fiscal stimulus would have been) relying on “loanable funds” type arguments. 

How about the most obvious answer, that Yellen is using this interview to run PR for the Fed. She leading a major institution that is under well-deserved criticism for its obvious preoccupation with banks during the crisis and post crisis period (and Lehmann takes note of that issue, pointing out that the central bank’s critics range from Rand Paul to Bernie Sanders). She’s trying to brand herself as a caring grandmother who can relate to regular folks because she came from the wrong side of the tracks, and the chump public should trust the Fed’s actions as embodying her professed world view. Lehmann promotes this effort to identify the Fed with Yellen’s supposed compassion for regular folk, starting with the article’s subhead: “How Janet Yellen is redefining the Federal Reserve.” 

And this isn’t all she stood for. Contrary to her pious claims of empathizing with the downtrodden, if you read her testimony during the 1990s, she was regularly described by Senators during her tenure at the Council for Economic Advisers as one of the most hawkish members of the Administration. She advocated cutting veterans’ benefits. She pointedly refused to cite increased concentration in banking as an antitrust risk and approved of communications industry mergers. She supported cap and trade. She favored austerity for Mexico during its 1994-5 crisis. She also stood with Gene Ludwig complained about deadbeat borrowers declaring bankruptcy in 1997, which was tantamount to throwing her support behind the bankruptcy reform bill that eventually passed in 2005. Reversing that bill has been widely cited as one of the most powerful single steps the government could have taken to stem foreclosures, since the threat of bankruptcy would have forced more servicers to restructure mortgages. 

At the Fed, Yellen is given more credit than she deserves for sounding some mild concern about rising housing prices. She’s also been cited as the best forecaster on the FOMC, but given how the FOMC failed to see the crisis coming, her “success” is tantamount to declaring her the winner of a height competition among peanuts. 

Yellen’s contention that she’s really out to help little people would be far more credible if she acknowledged her past anti-middle class policy positions and claimed that she’d made a Pauline conversion. But her institutional and political loyalties preclude that.

Yellen’s acting performance is strangely reminiscent of the most disingenuous crony billionaire operating in America today: Warren Buffet. There is no single person who has fooled more people, more of the time than the hamburger eating, ice-cream cone licking, cherry coke slugging. “Uncle” Warren Buffet. As I wrote in the 2011 post, A Wolf in Sheep’s Clothing:

Anyone that has read these pieces for a while knows where I stand on Warren Buffett.  Namely I can’t stand him.  It has nothing to do with the fact that he has so much money.  I am not an envious person and moreover I think having wealth anywhere near his is more of a curse than a blessing.  The reason I can’t stand him is because he is a fraud.  While he may have been a great investor at one point, he is more of a great actor than anything else.  Here is one of the richest people in the world.  He sits there in Nebraska, chuckling, drinking his cherry coke and eating hamburgers in this pathetically obvious attempt to convince the masses he is “just like us.”  The term wolf in sheep’s was invented for guys like this.  Like most people out there I don’t like bad guys.  The trick; however, is that the most dangerous bad guys don’t come out and tell you they are bad guys and how they are going to fleece you.  What they do is pretend they are the good guys.  Pretend that they are on the side of the little guy or working for the “collective good,” which is a preposterous statement because there is no such thing.  Human desires and notions of what is a good life are as varied as the stars in the sky.  Once we start allowing officials or rich people to define “collective good” you can be sure we are finished.

Now here is Senator Elizabeth Warren torching the fraud Janet Yellen. Enjoy.

In Liberty,
Michael Krieger