The Federal Reserve is draped in the cloak of academia for many Americans. Since the late 1970s, a studied economist has led the central bank. Some have been more professorial than others, but a key role they play is educator in chief about the U.S. economy. Most Americans, and some federal lawmakers, may not be interested in esoteric talk of yield curves, consumer expenditures and bank capital analysis so it’s become increasingly prudent for the Fed to speak clearly.
By virtue of the position and the growing influence of the bank, the chairman of the Federal Reserve has become the first responder to the American economy. We witnessed this during the Great Recession when the Fed aggressively cut interest rates and took extraordinary, and controversial, steps to intervene in the financial system. The reputation of the modern Fed as an economic fixer dates back to the early 1980s when then-Chairman Paul Volker undertook a strategy to squeeze out high inflation, helping unleash the economic boom that followed.
On Thursday in the week ahead, current Chairman Janet Yellen will hold an unprecedented internet town hall for teachers. It is a return to her roots. Before heading the Fed, Yellen was an economics professor. Thursday’s conversation is billed as a teacher town hall with the opportunity to ask the Fed chief questions.
With the economy playing such a pivotal role in the past election, Yellen has an opportunity to speak plainly about the Fed’s monetary mission to provide the U.S. with a stable and flexible financial system. While barely half of American households own stock, all Americans have a financial stake in better understanding our economy, and holding policymakers and politicians accountable for their decisions.
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Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.