Federal Reserve Chair Janet Yellen’s at the top of her game. She knows exactly what to do. She’s a PhD economist, after all. Her various affiliations with the Fed go back nearly 40 years. She knows what the correct Fed response is for every situation. She knows all.
But Yellen has her work cut out for her. Attempting to pilot an economy via monetary policy is not for a feeble mind. There are some answers that aren’t to be found in a textbook. There are other answers that aren’t present in graphs or dot plot charts. Sometimes squinted eyes, a furrowed brow, and deliberate prevarication are needed to parse out precisely what to do.
At this very moment, Yellen has a big brain twister panging her prefrontal cortex. She can’t do what she thinks she’s supposed to do. So, too, what she thinks she’s supposed to do she can’t do. The economic data – the gospel truth – won’t let her.
The latest jobs report, and a 5 percent unemployment rate, tells Yellen she should raise the federal funds rate in December. Continue reading
