February 4th, 2014
in Op Ed
by Peter Coyne, Daily Reckoning
The "global economy" has a new manager - Janet Louise Yellen. For various reasons, the previous 14 Fed chairmen failed to solve all the world's problems. In some cases, new problems arose. But maybe now that a woman has been appointed... the world's problems will be solved once and for all.
Here's hoping Ms. Yellen starts off the Fed's second century with an omniscient bang, eh?
Yellen is the QE candidate... keeper of the status quo... proud poster lady of the Ph.D. standard.
[L]ocate your "good side" before you accept Time magazine's Person of the Year award. You're going to want to frame that issue.
According to The Wall Street Journal, Yellen has consistently been a more accurate forecaster of doom than all her colleagues. After reviewing over 700 statements, the Journal ranked the current Fed's 14 board members by how well they forecasted growth, inflation and labor markets. Yellen was No. 1 overall.
The hapless Ben Bernanke? Well, he came in 10th.
If we've done our math correctly, Yellen should be 10 times more effective manning the spigot.
Even so, we'd like to give the soon-to-be chairwoman some friendly advice...
[Sound of desk drawer sliding open... your editor shamelessly pulls out a copy of 7 Habits for Highly Successful Central Bankers, by The Daily Reckoning.]
Janet, you're in a hairier situation than some of your predecessors who took their place at the helm of the committee...
[Thumbs through a few pages.]
Accordingly, since you're inheriting a pent-up crisis, you might have to go through these motions faster than others before you. Maybe even duck out before your first term ends. But let's start from the beginning:
- First, ride the wave in the good times. Take direct credit for all positive economic developments. At the same time, when faced with low growth or high unemployment, claim that monetary policy's not a panacea. It's important to keep a straight face while doing this (it might be hard at first, but keep trying. It gets easier. Practicing in front of a mirror helps).
- Next, endear yourself to the media by holding too many press conferences. That way, they'll give you a nifty nickname like "The Maestro" or "The Hero." (Here, we make our own forecast...yours will be the ever imaginative "Wonder Woman"... or some reference to The Rocky Horror Picture Show... depending, of course, on how the economy fares early under your direction.)
- Third, locate your "good side" before you accept Time magazine's Person of the Year award. You're going to want to frame that issue. All the while, mind you, you should be keeping one eye on the warning light.
- That's step four. After all, the economy will only go downhill the week after Time hits newsstands. You don't want to stick around for any of that.
- The fifth step, then, is to realize exactly when your policies are about to backfire (i.e., your cue to jump ship). Announce that you think the Fed is best served by someone else. Make it about "the economy," not you. Then, once you're free and clear, lay low for a year. When it feels right, follow step six: Begin writing the book about all the ways your successors should fix the problems that arose under your guidance.
[Flips the book closed... and looks up.]
Once you finish steps one through six, step seven is easy: Collect the multimillion-dollar advance from your publisher, pop open a glass of bubbly and... (Bonus, step eight: crack a wry smile and wink at yourself in the mirror)... toast the world to a job well done.
Oh, and one more thing, Janet. Remember your Shania Twain... "The best part of being a woman is the prerogative to have a little fun."
If the Fed needs any institutional change right now, it's to loosen the tie a little bit...
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