Skip to main content
Part of complete coverage from

Janet Yellen is about to become a superstar

By Frida Ghitis, Special to CNN
updated 7:53 AM EDT, Thu October 10, 2013
STORY HIGHLIGHTS
  • President Obama nominated Janet Yellen to be the next head of the Federal Reserve
  • Frida Ghitis: Yellen is exactly the right person for the challenges of our time
  • She says Yellen will likely do more to reduce unemployment and promote growth
  • Ghitis: As the first woman to lead America's central bank, she'll be a powerful force

Editor's note: Frida Ghitis is a world affairs columnist for The Miami Herald and World Politics Review. A former CNN producer and correspondent, she is the author of "The End of Revolution: A Changing World in the Age of Live Television." Follow her on Twitter @FridaGhitis.

(CNN) -- America is a lucky nation. When the country was about to plunge into an economic depression, the head of the central bank was a man who had dedicated his life to studying how to prevent a recurrence of the Great Depression.

And now that Federal Reserve Chairman Ben Bernanke is stepping aside, the economist nominated to succeed him, Janet Yellen, is once again exactly the right person for the challenges of the moment.

Yellen, not much more than 5 feet tall, is a towering intellect who commands respect from those who understand the intricacies of monetary policy and can explain them to those of more modest intellectual gifts, a skill that will prove useful when she faces confirmation in the Senate.

Frida Ghitis
Frida Ghitis

She will become the first woman to lead America's central bank; an apt way to mark the 100th anniversary of the Federal Reserve.

She will also become the world's most powerful woman.

If confirmed, Yellen will likely introduce meaningful, if very subtle, changes to the job. Under the outgoing chairman, the Fed applied innovative and aggressive policies, flooding the financial system by adding trillions of dollars to the central bank's balance sheet and bringing interest rates down to nearly zero to keep the economy from sinking.

The worst of that crisis is now over -- unless Congress sends the economy into the abyss.

Janet Yellen: Fed Reserve must serve all
Forward thinking is Yellen's trump card

The Fed now confronts two very different challenges. First, how and when to bring interest rates back to more normal levels without triggering a new recession -- the dreaded "taper." Second, what, if anything, to do about America's stubborn unemployment rate, which remains at historically high levels.

Yellen has a history of voting in line with Bernanke. She is not about to bring any sudden changes to monetary policy. But she has a track record, evidenced by her many academic writings and speeches, that emphasizes the need to create conditions that stimulate employment.

Unusual for an economist of her caliber, she has not drifted away into the abstractions of economic analysis and statistics; she has kept her eyes on what's critical -- the people. Her research has centered on unemployment, on the best way to modulate government policies to benefit the people.

"Long term unemployment," she told an audience earlier this year, "is devastating to workers and their families."

With inflation under control and unemployment still high, she said, "it is entirely appropriate for progress in attaining maximum employment to take center stage."

Those views will influence her work as Fed chairwoman. The Fed has two tasks -- to fight inflation and promote economic growth, including employment. The two are sometimes seen as conflicting with one another. To fight inflation, the Fed usually raises rates. But raising rates tends to depress economic activity.

In balancing the two tasks, Yellen will tilt slightly in favor of employment. That means she is more likely to leave interest rates at low levels until unemployment lessens.

Yellen's resume is impeccable. She chaired President Clinton's Council of Economic Advisers, served on the Federal Reserve Board of Governors, taught at Harvard, and was president of the Federal Reserve Bank of San Francisco. When she went home after work, her mind was not exactly at rest. She shared her evenings with her husband, George Akerlof, a Nobel-winning economist, described by some simply as "a genius."

He is such a luminary that when she was a professor at the London School of Economics, her former colleagues now admit that they mostly thought of her as Akerlof's wife.

In the 1990s, she successfully persuaded then-Fed Chairman Alan Greenspan that zero inflation would be harmful to the economy. To this day, Greenspan has only the highest praise for her rigorous intellectual analysis and powers of persuasion.

Her emphasis on employment qualifies her as an inflation "dove" and some critics worry that she will let her guard down if inflation resurfaces. But she has been sharply critical of Fed policies that allowed inflation to rise decades ago, vowing the Fed should never let that happen again.

The country might be in better shape today if policymakers had listened to her more carefully. In late 2007 she warned that the economy was about to take a hard fall. Now she has been ranked the best forecaster among all of the Fed's luminaries, and possibly the most qualified Fed chair in history.

When the time comes to start raising interest rates, the country will be in good hands. Yellen has said that she plans to go slowly, carefully and in creative ways. She revealed some of her ideas a few months ago, speaking of a plan to raise rates "in a way that's novel, that we haven't tried in the past." Essentially, hike the rates the Fed pays to banks in order to gently boost rates across the economy.

Yellen is so clearly the right person for the job that it is disappointing the White House handled the entire process in such an undignified way. Traditionally, the selection of the Fed chief has not been subjected to political winds. But the White House let it be known that its first choice for the post was the controversial economist Larry Summers. The trial balloon hissed noisily before it came crashing down. Last month, Summers sent a letter to President Obama asking that his name be withdrawn from consideration in order to avoid an "acrimonious" confirmation battle in Congress.

The process was unnecessarily disrespectful to Summers and to Yellen. She should have been the president's first and only choice. Lucky for America that the president came to his senses finally.

Janet Yellen is about to become a superstar.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Frida Ghitis.

ADVERTISEMENT
Part of complete coverage on
updated 9:49 AM EDT, Thu July 24, 2014
Patrick Cronin and Kelley Sayler say the world is seeing nonstate groups such as Ukraine's rebels wielding more power to do harm than ever before
updated 6:05 PM EDT, Wed July 23, 2014
Ukraine ambassador Olexander Motsyk places blame for the MH17 tragedy squarely at the door of Russia
updated 7:42 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 2:53 PM EDT, Thu July 24, 2014
Les Abend says, with rockets flying over Tel Aviv and missiles shooting down MH17 over Ukraine, a commercial pilot's pre-flight checklist just got much more complicated
updated 9:17 AM EDT, Thu July 24, 2014
Mark Kramer says Russia and its proxies have a history of shooting down civilian aircraft, often with few repercussions
updated 12:37 PM EDT, Thu July 24, 2014
Gerard Jacobs says grieving families and nations need the comfort of traditional rituals to honor the remains of loved ones, particularly in a mass disaster
updated 10:13 AM EDT, Thu July 24, 2014
The idea is difficult to stomach, but John Sutter writes that eating dog is morally equivalent to eating pig, another intelligent animal. If Americans oppose it, they should question their own eating habits as well.
updated 12:30 PM EDT, Wed July 23, 2014
Bill van Esveld says under the laws of war, civilians who do not join in the fight are always to be protected. An International Criminal Court could rule on whether Israeli airstrikes and Hamas rocketing are war crimes.
updated 8:05 AM EDT, Wed July 23, 2014
LZ Granderson says Ronald Reagan went horseback riding and took a vacation after the Korean Air Crash of 1983. So why does the GOP keep airbrushing history to bash Obama?
updated 9:38 AM EDT, Wed July 23, 2014
Aaron Miller says Kerry needs the cooperation of Hamas, Israel, Egypt and others if he is to succeed in his peacemaking efforts
updated 8:51 AM EDT, Wed July 23, 2014
Errol Louis says the tragic death of Eric Garner at the hands of the NYPD has its roots in the "broken windows" police strategy from the crime-ridden '80s.
updated 10:08 AM EDT, Wed July 23, 2014
Gordon Brown says the kidnapped Nigerian girls have been in captivity for 100 days, but the world has not forgotten them.
updated 7:27 AM EDT, Wed July 23, 2014
Ruben Navarrette says Texas Gov. Rick Perry is right to immediately send 1,000 National Guard troops to the U.S.-Mexico border in response to the border children crisis.
updated 9:56 AM EDT, Tue July 22, 2014
Ukraine's president says the downing of MH17 was a terrorist act, but Richard Barrett says it would be considered terrorism only if it was intentional
updated 4:15 PM EDT, Tue July 22, 2014
Robert McIntyre says the loophole that lets firms avoid taxes should be closed
updated 11:35 AM EDT, Tue July 22, 2014
Jeronimo Saldana and Malik Burnett say Gov. Perry's plan to send National Guard to the border won't solve the escalating immigration problem.
updated 1:42 PM EDT, Tue July 22, 2014
Sally Kohn: The world's fish and waters are polluted and under threat. Be very careful what fish you eat
updated 8:42 AM EDT, Tue July 22, 2014
Les Abend says threat information that pilots respond to is only as good as the intelligence from air traffic controllers. And none of it is a match for a radar-guided missile
updated 8:35 AM EDT, Mon July 21, 2014
Frida Ghitis: Anger over MH17 is growing against pro-Russia separatists. It's time for the Dutch government to lead, she writes
updated 8:27 AM EDT, Mon July 21, 2014
Julian Zelizer says President Obama called inequality the "defining challenge" of our time but hasn't followed through.
updated 7:57 AM EDT, Mon July 21, 2014
Gene Seymour says the 'Rockford Files' actor worked the persona of the principled coward, charming audiences on big and small screen for generations
updated 10:17 AM EDT, Mon July 21, 2014
Daniel Treisman says that when the Russian leader tied his fate to the Ukraine separatists, he set the stage for his current risky predicament
updated 12:42 PM EDT, Fri July 18, 2014
Andrew Kuchins says urgent diplomacy -- not sanctions -- is needed to de-escalate the conflict in Ukraine that helped lead to the downing of an airliner there.
updated 9:50 PM EDT, Fri July 18, 2014
Jim Hall and Peter Goelz say there should be an immediate and thorough investigation into what happened to MH17.
updated 11:07 AM EDT, Fri July 18, 2014
Pilot Bill Palmer says main defense commercial jets have against missiles is to avoid flying over conflict areas.
updated 1:55 PM EDT, Sun July 20, 2014
Valerie Jarrett says that working women should not be discriminated against because they are pregnant.
updated 3:53 PM EDT, Mon July 21, 2014
David Wheeler says the next time you get a difficult customer representative, think about recording the call.
updated 3:33 PM EDT, Fri July 18, 2014
Newt Gingrich says the more dangerous the world becomes the more Obama hides in a fantasy world.
updated 6:11 AM EDT, Fri July 18, 2014
Michael Desch: It's hard to see why anyone, including Russia and its local allies, would have intentionally targeted the Malaysian Airlines flight
updated 3:14 PM EDT, Thu July 17, 2014
LZ Granderson says we must remember our visceral horror at the news of children killed in an airstrike on a Gaza beach next time our politicians talk of war
updated 8:06 AM EDT, Thu July 17, 2014
Sally Kohn says now the House GOP wants to sue Obama for not implementing a law fast enough, a law they voted down 50 times, all reason has left the room.
updated 8:14 AM EDT, Thu July 17, 2014
A street sign for Wall Street
Sens. Elizabeth Warren, John McCain and others want to scale back the "too big to fail" banks that put us at risk of another financial collapse.
updated 4:16 PM EDT, Thu July 17, 2014
Newt Gingrich writes an open letter to Robert McDonald, the nominee to head the Veterans Administration.
updated 12:01 PM EDT, Fri July 18, 2014
Paul Begala says Dick Cheney has caused an inordinate amount of damage yet continues in a relentless effort to revise the history of his failures.
updated 10:04 AM EDT, Fri July 18, 2014
Kids who takes cell phones to bed are not sleeping, says Mel Robbins. Make them park their phones with the parents at night.
updated 12:25 PM EDT, Thu July 24, 2014
Buzz Aldrin looked at planet Earth as he stood on talcum-like lunar dust 45 years ago. He thinks the next frontier should be Mars.
updated 2:04 PM EDT, Wed July 16, 2014
Mark Zeller never thought my Afghan translator would save his life by killing two Taliban fighters who were about to kill him. The Taliban retaliated by placing him on the top of its kill list.
updated 11:18 AM EDT, Thu July 17, 2014
Jeff Yang says an all-white cast of Asian characters in cartoonish costumes is racially offensive.
updated 9:24 PM EDT, Wed July 16, 2014
Gary Ginsberg says the late John F. Kennedy Jr.'s reaction to an event in 1995 summed up his character
updated 12:41 PM EDT, Wed July 16, 2014
Meg Urry says most falling space debris lands on the planet harmlessly and with no witnesses.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT