Sunday, March 22, 2015

Janet Yellen Achieves Greenspanese

It has finally arrived, the moment where Fed Chair Janet Yellen shows she has the stuff, the language stuff, which is not surprising given that as Vice Chair under Bernanke she was leading the effort to figure out how the Fed should communicate with the rest of the word.  And the answer is, as it always has, as confusingly as possible.

The moment came when after noting that "patient" had been removed from the FOMC's officially written communication, this did not mean "that the Fed has become impatient."  The markets had been roiling and boiling, but this Greenspanish remark quickly calmed them.  Confusion reigns and all is well.

Yellen plays the dialectical tension between openness and opacity better than any Fed Chair yet.  Of course, in the ancient of days, the Fed made its decisions secretly and that was that.  Nobody complained, or not too  loudly or effectively or only occasionally.  But then, in the 1970s it came to pass that Congress made Fed Chairs testify periodically on what they were up to, although FOMC meetings continued to be secret with only delayed reports of what they were up to.  Arthur Burns in his testimonies to Congress would assist his obfuscations by smoking a gnarled pipe, which, with his Hoover era appearence, would make him positively owlish as he would disappear into clouds of smoke.  For Volcker, it was massive cigars that would accompany his massive frame, but the disappearence into smoke would provide the appropriate hint of wizadry, as if Fed Chairs were really Tolkien wizards arguing over golden rings of power, if not over gold itself, long shorn of its divine authority that it had from the days of Egyptian pharaohs when its yellow colar and inertness supposedly represented the eternal sunshine associated with Pharaonic divinity.

Since then the thrust has been for ever more openness and instant press conferences, not to mention the disappearance of smoke, even the cigarettes of Greenspan, although he perfected the language of obfuscation that led to not needing the smoke, if still perhaps the mirrors.  Bernanke never could quite measure up to the Greenspanianly eloquent incoherence, although he learned quickly to avoid rattling the markets with overly open remarks about hard facts. But, with this performance, Janet Yellen shows she has transcended Bernanke, and may have even shown how to be obfuscatory and brief all at the same time, thus achieving a truly dialectical synthesis between openness and opacity.

Barkley Rosser


media said...

well, didnt she make one correct decision by marrying akerlof?

media said...

ps---akerlof is well known for having invented lemonade. i used to pick lemons down in bentura california---worst idea ever if you are picking fruit---needles and pins (ramones song)-sticker bushes. interestingly i was the only non latino there but people were nice said...

They met in the Fed cafeteria in Washington back in the 70s, definitely a good match. He is brilliant but spacey and disorganized, while she is level-headed and super organized. There is no question she was a better choice than Summers would have been.

media said...

well, there's always polygamy---she could have taken both (buy one get one free deal). summers is known for inventing 'summer'---one of the 4 seasons (old sixties pop group). u Kant have a market for lemons without summer, a time when the living is easy, unless you're picking lemons in ventura ca. (i am sending a gift packcage to Cali of bottled water in exchange for them remembering to send the vegetables and fruit east). Larry Summers also proved at MIT something like females do not have a measurable IQ. (except maybe emma noether and julia robinson---hilbert's 10th wife or problem)

media said...

ps i noticed you spoke at the 'chaos theory in the life sciences' conference around milwaukee ---wonder what the topic was---(milwaukee is famous for having the 'best' beer (sometimes 3$ for a 6 pack)and also scott and luke sky walker (i think a couple famous for education and union reform, and creating the wisconsin dells theme park---m shermer 'libertarian' 'atheist' and 'skeptic' said on radio citing the Bi(b)le'if 2 men lie together they must be stoned'---a combination of gay marriage and weed legalization. said...


I spoke on "Complexity and Behavioral Economics," a keynote address at the conference. And, yes, the beer is both good and reasonable there. However, I have nothing good to say about the current governor.

media said...

i consider myself an expert on behavioral economics---for example, i took a MOOC with ariely of duke on this. (he explains why people may have bounded rationality or rational addiction---and he has it too, if u look at who he consults for in businesss---like many low paid workers he needs to have 2 or 3 jobs to make ends meet, like math proofs--'and then there is a miracle'. QED) The MOOC seemed to prove the point---'physics is the only real science, all the rest is stamp collecting' (though some physicists disagree i think--- see 'pankaj mehta' of BU-'we have a gene for that' in jacobin magazine online--he doesn't think there is a complexity science (tho he also said in an email his buddy redner is now at SFI and says its fine).

do you have a paper on this? eg how to replace say a cobbs-douglas, or other utility function (say additive---2 apples equals 2 oranges, or judgement of solomen---2 * 1/2 a baby equals a whole baby) with one informed by behavioral economics which explains why different stamp colections, or snail darter fish have a difference that makes a difference?

u must not have gotten 'milwaukee's best' beer. it is one step above, say, steel reserve.

that current governor talks a good line, but i knew a bunch of people around madison who disagree, i'm agnostic.