What is Janet Yellen’s Secret Passion?

Michael Hirsh asks, “What is Janet Yellen’s Secret Passion?”

“Yellen is also the product of an old progressive tradition of activist, pro-government economics. Above all, according to colleagues, she takes the nation’s worst problems, especially unemployment, as a deeply personal challenge. [She] represents a strain of interventionist thinking that has not found expression at such a high level in Washington in decades.”

“She has two grand passions that will require government to help in a very big way: reducing chronically high unemployment—which is the focus of her life’s work and is probably the single biggest economic problem in America today—and reining in Wall Street’s excesses.”

How she’ll differ from her predecessors: “She is … an old-style ‘hydraulic Keynesian’ who believes she can act as a control engineer over the economy, printing money to drive down unemployment.”

She “also embraces the young field of behavioral economics, which posits that people often don’t act rationally the way economic models say they should.”

Wall Street take note: “Her view is that financial markets have and will continue to fail disastrously unless they are further constrained, sources close to her say.”

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