Former Fed Chair Yellin Named New Treasury Secretary
One of the real fears of a Biden presidency is who he might appoint as Secretary of the Treasury. Janet Yellin is at least a more palatable option than someone like Elizabeth Warren.
To go along with the country’s first female Vice President, President-elect Joe Biden has also broken the gender barrier with his selection for Secretary of the Treasury, choosing former Fed Chair Janet Yellin for his appointee.
It is not just a matter of Biden appointing someone like some of the media are suggesting, drunk on the idea of someone from their party being in the White House again no doubt, as this appointment is subject to majority approval by the Senate. Yellin is a good bet though considering what the alternatives may be, especially with the radical socialists in the party pressuring him to pick someone more “progressive.”
Progressive here is a loaded word, and only really is apt if you consider moving much further to the left of the political spectrum than we ever dared go before. If anti-capitalism is seen as progress, this certainly is more progressive than our country has ever even dreamed, and at least Yellin is a capitalist, even though she likes to spend capital more than it may be ideal to if we are to gain enough fiscal responsibility to deal with a debt growing so alarmingly.
Perhaps surprisingly, some of these “progressives” are happy with the pick, even those who were hoping for Warren getting the appointment. Yellin has demonstrated a good understanding of monetary policy though, and has had similar views to current Fed chair Jay Powell, who is certainly considered friendly to the markets these days at least, although that hasn’t always been the case during his tenure.
The stock market has a strong preference toward a freewheeling Fed, and they got more of that than they could ever have imagined lately, and also don’t mind a freewheeling Treasury Secretary either. They live for today, and aren’t particularly concerned about fiscal restraint, and it actually makes sense that they wouldn’t be.
The doors of the Fed these days are more open than a recently looted storefront, where they opened up the vault and the country has been welcome to help themselves to trillions of dollars in extra money supply. This isn’t necessarily that great of an idea longer term, as this will come back to bite us one day by requiring monetary restraint to rebalance the inflationary forces that this will cause, but it’s more fun to make money now than it is to worry about our stocks taking a hit when they need to shrink the money supply back down to normal size with interest rate hikes and some big quantitative tightening to go with it.
Yellin Won’t Do Much Harm and May Actually Do Some Good
Having Janet Yellin as Treasury Secretary will likely end up making this not too much worse in the end, when we either put the breaks on or do some real damage on the expansionary side. We can rest a lot easier though knowing that if Yellin gets confirmed, there will at least be one person in Biden’s gang that has any idea of the downside of economic expansion. We weren’t going to get a conservative, but as far as the market goes, Yellin might be an even better choice now because she’s not afraid to put her foot on the gas and we could use some of that now, but understands we cannot rev the engine to failure.
Compare this with someone like Elizabeth Warren with her political mania. People like Warren and the rest of the radicals in the party do not think past the smile it puts on their face with things like massive wealth taxes, Medicare for All, paying off everyone’s student debt, and all of the other cherished ideals they hold. We cannot ever go off the deep end like this because the water will be too high and we will drown.
Secretaries of the Treasury don’t really do all that much that affects the market, and the idea that Yellin can reach in her box and toss trillions at us is not particularly well guided. We’re even seeing things like get ready for her to roll out a Democrat-sized stimulus package, but even the President can’t do such things, and a lot of the sugar plumbs dancing in the heads of liberal media aren’t things that either Santa Biden or his elves like Yellin can deliver without Senate support.
Aside from acting as an economic advisor to the President, the Secretary of the Treasury oversees banks, and as far as investors go, this is where the rubber meets the road. We may expect tighter regulation here, something that was already on the board if Biden won, and now he’s got someone who will be happy to do it for him.
Now, we know that at least a good measure of restraint will be used. Someone that may feel that we may need to put the brakes on banks but not too much that we pay a big price is surely better than someone who wants to bust their chops for its own sake, with a battle cry to punish the wealthy just for the fun of it all.
People think that since the Treasury oversees the “printing of money,” all they need to do is print a lot more of it and we can party with it, but the country’s money supply is actually controlled by the Federal Reserve, her old job. It is nice to know that there is someone in Biden’s cabinet who knows a little about money supply, quite a bit actually, and especially knows that going too crazy with it is not a good thing, it’s a bad thing.
A Very Good Understanding of Finance is Critical, and Yellin Has It
Treasury Secretaries are expected to have a strong background in finance, and Yellin is certainly very well qualified in this regard. Yellin served under both Barrack Obama and Donald Trump, and when you serve under Trump, he has a way of bringing anything anti-economy to a head. This is a different role for her and one that has the potential to do some real harm, but we could do much worse than her.
The combination of economist and Democrat would normally make us shudder, as the world of economics is well colored by politics along with just about everything else, and there are some genuine hardline lefties in the stable. The way that the Democratic party has moved from being moderately left to views considerably more extreme left than the country has ever seen, it’s nice to have someone like Yellin who is from the old school, a liberal to be sure but not one that is so eager to achieve their political objectives that they become reckless and stupid.
Yellin is more like what Democratic Secretaries of the Treasury used to be before much of the party got the idea to overthrow capitalism, and the wrong person in this role could unleash some real havoc on the markets by pursuing regulations that are on the far side of sensible. Yellin knows full well that you can’t bash our economy too much with these things, and this scepter is much safer in her hands than in someone who only wants to use it as a weapon to punish the rich and especially rich companies.
That’s one of Warren’s biggest ambitions, and those who think that Yellin will be bashing in the windows of financial institutions the way Elizabeth would surely want to do if given the chance. Yellin is far more of a moderate, and moderation is needed even more in the face of a terrifying will towards radicalism in this party.
Should Biden actually win the presidency, something decided by Congress and not the media and not even the vote counters, having Janet Yellin in this role is the best we could have hoped for from this administration.
Yellin is not going to be passing any stimulus bills, and while her party will need to do a much better job at ditching more of their pork before such a deal gets done, having Yellin on the team to inject more pragmatism could be just what the doctor ordered, and maybe as good of a pick overall as either man could have made. We did not expect anything that we would come to like or even tolerate from Biden, so this was a nice surprise.
Editor, MarketReview.com
Robert really stands out in the way that he is able to clarify things through the application of simple economic principles which he also makes easy to understand.
Contact Robert: robert@marketreview.com
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