What Will She Do?

Last week we introduced Janet Yellen and the dilema facing her transition into the seat as our next Federal Reserve Chairman.

We asked a few questions and felt it was time to unpack a bit of our thinking for you here.

So what is Yellen likely to do now that she has inherited QE with an economy not ready to taper? Will she reverse current Chairman Bernanke’s loose monetary policies? Will she be the one to put a final end to QE? We say no way. In fact, we believe that the opposite is more likely… based on her track record, we think she will probably increase the stimulus before she decreases it!

Not so sure? Yellen is already well documented as being more “dovish” then even Ben Bernanke.  That means she believes even more than he did that it is possible to create prosperity and growth by printing money out of thin air. Here is a Reuters chart of current Fed members (dovish means they favor money printing, hawkish means they do not):

As you can see, the doves outnumber the hawks 11-7.  And perhaps even more importantly, the person in charge is the most dovish of all. So it seems that the most likely outcome will be a continuation of Bernanke’s policies, and maybe even an increase.

Please stay tuned here as we continue to blog on these topics that avoid the typical rhetoric you will find on the news outlets. Our desire is to help investors know what to look for and how to navigate during these times of uncertainty. We welcome your comments and your questions and we appreciate you sharing our links with your networks.

Categorized in: Blog

This post was written by Conscient Capital