Janet Yellen gets the Fed nod

The long-awaited announcement is here: Janet Yellen, currently the vice-chairman of the Federal Reserve, will soon take the number-one spot from Ben Bernanke. While an official nod has yet to come from President Barack Obama, well-placed sources have indicated that Yellen is indeed set to take over one of the most powerful jobs in the world.

How effective will she be? In her scholarly writings and public statements, Yellen has proven herself to be more aware of the unemployment crisis currently intensifying in the United States. But, like Bernanke, Yellen is likely to follow the official estimates for unemployment – currently projected at 7.3 percent – when determining whether or not to taper quantitative easing (QE). This figure ignores the rising plague of underemployment, as well as the issue of people leaving the job market entirely. It has been little discussed within the mainstream media that the national labor participation rate is at a 35-year low.

Obviously, those who take a more skeptical stance on the Fed's effectiveness in spurring the U.S. economy will have to wait and see how Yellen will behave in her new position. As Bernanke's term continues until January, she will no doubt continue to play a critical role in the central bank's deliberations about when to start reeling in the $85 billion-per-month asset purchases. A more likely scenario is that Yellen, once she takes over, will keep pumping liquidity into the market until she and the rest of the Federal Open Market Committee (FOMC) develops a more viable solution.

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