Politics

Yellen Pens A Scathing Reply To Nader’s Letter

Aging consumer advocate Ralph Nader wrote Federal Reserve Chair Janet Yellen an open letter a few weeks ago. The letter was rather controversial, not just for its blunt criticism of the Fed’s obstinate refusal to increase interest rates, but for it’s personal tone.

Fed Chair Janet Yellen as a contestant on the game show "Who Wants To Be A Millionaire"
The comic features features Fed Chair Janet Yellen as a contestant on the game show “Who Wants To Be A Millionaire”. The audience behind Yellen, which includes former Fed chief Ben Bernanke, are throwing tomatoes at her.
Caption for the comic: “After disappointing markets last week, will Yellen make it up to them later this year?”
The Federal Reserve’s decision last week not to raise interest rates disappointed most market players who were expecting the central bank to hike rates for the first time since 2006. The questions remains whether Yellen and the Fed will make it up to them at some point later this year, or will they delay the move to early 2016. The central bank has two more scheduled policy meetings before the end of 2015, in late October and mid-December.

In the letter, Nader said: “I think you should sit down with your Nobel Prize winning husband, economist George Akerlof, who is known to be consumer-sensitive. Together, figure out what to do for tens of millions of Americans who, with more interest income, could stimulate the economy by spending toward the necessities of life.”

Nader’s letter received a good bit if criticism from both the right and the left, with some in the progressive camp rightly accusing Nader of sexism in his approach to Yellen.

Janet Yellen is, however, no shrinking violet, and and on Monday she penned a scathing reply to Nader’s letter. That said, the content and the tone of the letter were rather predictable, and merely rehashed the politically correct narrative that eight long years of ultra-low interest rates have been “necessary” to protect the economy after the financial crisis of 2007.

It’s a sad sign of the times that a leader of our country can sit there and say without embarrassment that business is more important than people, and that she’ll continue to do whatever it takes to support business no matter how much desperate Americans suffer because of her business-first policies. Her words also make it crystal clear she stands on the side of Wall Street, not Main Street.

Yellen defends the Fed’s actions in her letter

In her letter, Yellen argues that Americans would have been worse off had the central bank not kept rates very low since 2008, and also notes she anticipates tightening policy “gradually” after liftoff.

Saying that “an overly aggressive increase in rates would at most benefit savers only temporarily,” she claims that the Fed’s seven plus years of ultra-low interest rates had protected American savers from huge hits to the value of their homes and savings accounts.

“Many of these savers undoubtedly would have lost their jobs or pensions (or faced increased burdens from supporting unemployed children and grandchildren),” if the Fed had not acted as it did, she argued in her letter.

See the full letter below.

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