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Yellen: Fed Will Keep Swimming on the Bernanke Stream

“The unemployment rate is still well above levels... consistent with maximum sustainable employment,” new Fed chair tells Congress.

Rodrigo Sermeño


February 17, 2014 - 12:07 am
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WASHINGTON – Federal Reserve Chair Janet Yellen said Tuesday that the central bank will continue reducing its monthly bond-buying program at a steady pace, following the course established by her predecessor.

Yellen spoke about the economic recovery, monetary policy, and the financial system before the House Financial Services Committee in her first appearance on Capitol Hill since being sworn in last week.

Yellen said recent volatility in global financial markets did “not pose a substantial risk to the U.S. economic outlook.”

“We will, of course, continue to monitor the situation,” she said.

Yellen promised some continuity with the strategy laid out by Ben Bernanke, her predecessor. She reiterated that the Fed was on track to keep reducing the amount of money the central bank is pumping into the economy.

“I expect a great deal of continuity in the Federal Open Market Committee’s (FOMC) approach to monetary policy,” Yellen told the committee.

The Fed has been buying longer-term Treasury securities and mortgage-backed securities to push down long-term interest rates, as an attempt to stimulate spending in the economy and spur economic growth.

Yellen said that the economy gained traction in the second half of last year, pointing to real GDP growth, which rose at an annual rate of more than 3.5 percent in the second half, compared to 1.75 percent in the first. She also said there has been progress in the labor market which has added 3.25 million jobs since the Fed began a new round of asset purchases in August 2012.

Nevertheless, she noted, the recovery in the labor market is far from complete.

“The unemployment rate is still well above levels that FOMC participants estimate is consistent with maximum sustainable employment,” Yellen said.

The economy added just 113,000 jobs last month and 75,000 jobs in December.

The FOMC, the Fed’s policy-setting body, will meet in March. Yellen said only a “notable” change in outlook would cause the committee to pause the current course and only a “deterioration” in outlook would cause it to increase the amount purchased.

Those out of a job for more than six months continue to make up a large portion of the unemployed and the number of people working part-time who would like a full-time job remains very high, she said.

Yellen also said the Fed’s short-term interest rates are likely to remain at the current level of near zero well after the end of the bond-purchasing program.

Several lawmakers challenged Yellen’s opposition to legislation that would subject the Fed to an audit.

Rep. Michele Bachmann (R-Minn.) said the Fed was wrong to oppose the audit legislation championed by former Rep. Ron Paul.

“The American people are feeling less and less empowered to be able to hold the Federal Reserve responsible and accountable because they’re seeing the Federal Reserve’s balance sheet escalate to a level never before seen in American history,” Bachmann said.

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Buy bonds, don't buy bonds -- what difference does it make? How is that going to bring 6,000,000 jobs, and 55,000 factories, back from overseas? Crazy Cat Lady has no more idea of what to do than her predecessor.

We produce less and less, we consume more and more, and we borrow to cover the difference. And the pundits and brainiacs say, "Tra-la-la, we don't care, it's free trade, those jobs aren't coming back."

Well, if those well-paying, middle-class factory jobs don't come back, our economy won't come back.

1 year ago
1 year ago Link To Comment
So let me see how this goes, if I print dollars out of thin air with no economic growth to back it and then inject it into a stagnant market, Voila! I have market growth also determined in dollars equal to the inflation of the money supply that is being created. So we're supposed to believe that the market and hence the economy is growing? BS! One only has to look around their locality. Neighbors laid off or working part time with reduced/no benefits, local businesses cutting back, High School and College graduates struggling to find work, few if any new construction starts, cities, counties and states raising taxes, inflation starting to be felt in such basic necessities as food. e.g. Milk is now more expensive than gasoline per gallon.

And the only investors making money riding the market bubble are the billionaire fat cats, who undoubtedly will be quietly warned by our corrupt crony-capitalistic democrats, in exchange for more campaign donation cash and secret deals to make the politicians rich, when to pull out before the artificial government created market bubble collapses. As for the individual mom and pop middle class investors ... well somebody has to be the loser in the great 2008-2018 market scam.

Besides who needs the middle class anyway, when there are so many potential democratic voters flooding across our borders who are used to living under corrupt government and paying for the privilege to live in slums working for the man. Just got to pass that Amnesty bill eventually or better yet just ignore voting laws, by calling them racist, which were designed to prevent voter fraud. This is even better in that the illegals will be even more beholding to the man and will be sure to vote at least twice per election ensuring the right democrat wins every time. Don't you love it when a plan comes together?

Had enough yet? Its time to organize locally, plan collectively and march this summer on Washington in the millions and not leave until the whole lot of federal politicians going along with this crap are thrown out of office, before it becomes too late. I never thought I would hear an American Federal politician in my lifetime say that the President is breaking the law but we, the legislative branch of government, can do nothing despite our oaths. Time for the people to take control of our government before it takes control of us; before it leads to bloodshed and/or our permanent impoverishment or virtual slavery.
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1 year ago
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