The problem with Janet Yellen is her belief that the Fed can fix the unemployment problem with monetary policy — by reducing the purchasing power of workers and others on fixed incomes so that wages can appear to remain the same while they are really really going down after taking inflation into consideration. She believes that this will make American workers more “competitive” with Third World workers, so more people will end up being employed.
Of course, this additional employment is only good if one can actually afford a decent living with those wages. If you can only afford to buy a bowl of rice and share a mud hut with 20 others, it’s not the panacea Janet Yellen seems to think it is…at least not for the average American workers.
Like her predecessors, she’s focused on asset price inflation, which does more damage than good where Joe Sixpack is concerned.
