Just what is percolating in Janet Yellen's mind? The "diminutive woman with a pixie haircut"—oh, and chief of the US Federal Reserve—has emitted vague policy signals but divulged no clear plan (as Fed chiefs are wont to do), Politico reports. Some see a progressive with labor leanings, but others disagree. A few clues:
- At a key annual meeting of financial players this year in Jackson Hole, Wyoming, Wall Street economists weren't invited—but AFL-CIO chief economist Bill Spriggs was. "The Fed organizers wanted to keep the focus on labor," he said.
- The New Yorker painted her as a pure Keynesian, yet former Fed chief Ben Bernanke sees her differently: "She is appropriately concerned about jobs, as I was, but she has also shown that she is committed to maintaining price stability." In other words, the middle ground.
- Times have changed since most of Bernanke's tenure, when the Fed regulated banking but bore no responsibility for keeping the entire economy stable. Now it does, and some analysts predict that Yellen will regulate the financial world intensely (even though Wall Street "cheered her nomination," the National Journal notes.)
- One hint of a regulator: her remark that "to understand what went wrong" in the financial meltdown, "I refer you to Hyman Minsky's path-breaking work." Minsky, once a little-known economist, argues that booms lead to recklessness, which culminate in a "Minsky moment" and an inevitable crash. Believe that, and you oppose Alan Greenspan's belief that markets regulate themselves.
- Well, not so fast: Yellen could be a "nonideologue" who will "follow the facts" as she cautiously balances unemployment with inflation, the Journal reports. "She is truly a scientist, in that she is an observer," says one economist. The Journal seems to agree: "She doesn't look like much of a bomb-thrower."