Eurodollar University’s Making Sense; Episode 38; Part 1: Go-to Pedigree, the Least Worst

———WHERE———

———WHO———

Twitter: https://twitter.com/JeffSnider_AIP
Twitter: https://twitter.com/EmilKalinowski
Art: https://davidparkins.com/

Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, tongue-tied by Rana Foroohar. Artwork by David “Banquo” Parkins.

———WHY———

38.1 Janet Yellen: Competence or Happenstance?
What is former Federal Reserve Chair Janet Yellen all about? What can we expect from the US Treasury under her leadership? She didn’t commit any MAJOR errors during her term. Was it competence, or happenstance?

[Emil’s Summary] Christine Lagarde, Janet Yellen and Stephanie Kelton are among the world’s best known political-economists. Lagarde, was France’s Minister of Finance, Managing Director of the International Monetary Fund, and is President of the European Central Bank – all firsts for a lady. Yellen, was America’s Chair of the Federal Reserve and is presumptive nominee for US Secretary of the Treasury – each a first for a lady. Kelton, was advisor to the Bernie Sanders 2016 presidential campaign, is a best-selling author, and is the most famous evangelist for modern monetary theory (MMT).

And now these remarkable three are in positions of power and influence to guide the world out of socioeconomic depression. It echoes the 1999 cover of Time Magazine featuring three men — Robert Rubin, Alan Greenspan, and Larry Summers — with the agitated headline “The Committee to Save the World”. Alas, this 38th episode of Making Sense continues the long tradition of unease found in the Western canon regarding the female triumvirate.

Yes, of course The Graces — Aglaea, Euphrosyne, and Thalia — were lovely… but there was the rumor about them spending so much time in the underworld. No need to comment on the Harpies – a triad of vengeful, winged sisters. And who can forget The Witches of Eastwick: Susan Sarandon, Michelle Pfeiffer and Cher? They put your podcaster off cherries for the rest of the 80s. But it is Shakespeare who provides us the incomparable trio: the Weird Sisters. Better understood today as ‘weyward’ or ‘weyard’, they were the Anglo-Saxon Fates responsible for divination and predictions – what we call “economics” in modern day. Don’t take this podcaster’s word for it – listen to the Bard:

<<Macbeth, Act 4, Scene 1:>>
Round about the cauldron go;
In the poison’d policies throw.
Media, that report narrative
Days and nights as quantitative
Sweat inflation running hot
Boil thou first i’ the charmed pot.

Double, double toil and trouble;
Fire burn, and cauldron bubble.

Soul of financial journalist
In the cauldron boil and mist;
UBI of newt and bank reserves,
Wool of bat and control of curves,
Adder’s fork and Janet’s QE,
Lizard’s leg and Kelton’s MMT,
For a charm of powerful trouble,
Like a hell-broth boil and bubble.

Zirp, nirp toil and trouble;
Economy burn, and markets bubble.

———WHEN———

00:28 Chair Yellen’s tenure at the Fed coincided with ‘the best jobs market’. Yes, but also no.
03:36 Yellen didn’t make any MAJOR errors as Chair; was it competence or happenstance?
06:53 Did Yellen foresee the mortgage bubble and crisis back in 2005? One quote implies she did.
08:46 But another quote of hers in 2006 says housing prices were relatively fundamental and fine
11:16 In May 2007 – just two months before the crisis began – Yellen said, ‘This is fine’.
13:17 Yellen is model-driven; that IS NOT the same as market-driven.

———WHAT———

Meet the Same New Boss: https://bit.ly/39JxXAg
(NY Times) Divining the Regulatory Goals of Fed Rivals: https://nyti.ms/33MtJnN
(CBS News) Janet Yellen: The exit interview: https://cbsn.ws/3lHbeaB
(The FT) Janet Yellen is the right woman for the times: https://on.ft.com/36FvMfe
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7

Eurodollar University’s Making Sense; Episode 38; Part 1: Go-to Pedigree, the Least Worst

About the Author: Jeffrey P. Snider

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