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Article Abstract

YELLEN FROM THE HEART In a speech at a conference co-sponsored by the AFL-CIO on Feb. 11, Janet Yellen, Ben Bernanke's No. 2, reminded the world what to expect should she become America's monetary No. 1. Yellen, who speaks often and fluently, is a known quantity, Chairman Bernanke's "intellectual doppelgänger," Grant's has called her, though we wish we hadn't (see the issue of Nov. 16). Her own woman with her own fine mind, Yellen doesn't mimic Bernanke's errors but makes her own. "A Painfully Slow Recovery for America's Workers: Causes, Implications and the FEDERAL RESERVE's Response" was the title of her talk. Reading it, you can be sure that a Chairman Yellen would not be for raising INTEREST RATEs until the lights went back on in the U.S. labor market. And what might flip the switch? Why, more of what hasn't worked so far, the vice chairman suggested: more ZIRP, more QE, more "communication" of the central bank's intentions to stay easy for longer than you might imagine. Nowhere in her speech did Yellen admit the possibility that the singular lack of dynamism in the post-Great Recession economy might be owing to too much monetary medication (the Grant's working hypothesis), rather than too little. "The unemployment rate now stands at 7.9%," she reminded an audience that probably didn't need reminding: "To put this number in perspective, while that's a big improvement from the 10% reached in late 2009, it is now higher than unemployment ever got in the 24 years ...

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