Key takeaways from Janet Yellen’s job speech in Chicago

Key takeaways from Janet Yellen’s job speech in Chicago (Part 1 of 10)

Janet Yellen speaks for the Fed, promoting a stronger job market

Yellen’s speech

Janet Yellen, the Federal Reserve’s current Chair, spoke on March 31 at the National Interagency Community Reinvestment Conference in Chicago on what the Fed is doing to promote a stronger job market.

Civilian Unemployment RateEnlarge Graph

Two weeks ago, at the press conference held pursuant to the FOMC meeting, Yellen had suggested that interest rates could start rising six months after the Fed’s bond purchase program ends. That would mean if tapering continues as planned, rates would begin rising next spring—far earlier than expected. The uncertainty surrounding the FOMC announcement led to a spike in bonds yields, leading to a fall in bond prices (bond yields and prices share an inverse relationship). The fall impacted popular bond exchange-traded funds (or ETFs) like the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Barclays High Yield Bond (JNK), which fell 0.51% and 0.34%, respectively. The Dow Jones industrial average index (DJI), which includes companies like Microsoft Corporation (MSFT) and Johnson & Johnson (JNJ), also dropped, by 0.8%.

Yellen began by addressing her audience about what the Fed is doing to help the nation recover from the financial crisis and the Great Recession.

Strengthening the financial system

The Fed has made an effort to strengthen the financial system. New rules have been put in place to better protect consumers and ensure that credit is available to help communities grow.

Yellen highlighted that the Fed promotes community development by fostering dialog and supporting the work people do in their communities. The Fed ensures that credit is available for families to buy homes and for small businesses to expand. Among other things, programs such as the organizations sponsor program help make communities safer and families healthier and financially more secure. Also, they help people meet the demands of finding a job in a challenging economy. And that help is crucial.

Yellen believes that finding a job in a challenging economy can’t succeed without two other things. Find out more in the next part of this series.

The Realist Discussions

  • http://PeterPalms.com/banking Peter Palms

    MYTH ACCEPTED AS HISTORY

    The accepted version of history is that the Federal Reserve was created to stabilize our economy. One of the most widely-used textbooks on this subject says: “It sprang from the panic of 1907, with its alarming epidemic of bank failures: the country was fed IT once and for all with the anarchy of unstable private banking.” Even the most naive student must sense a grave contradiction between this cherished view and the System’s actual performance. Since its inception, it has presided over the crashes of 1921 and 1929; the Great Depression of ’29 to ’39; recessions in ’53, ’57, ’69, ’75, and ’81; a stock market “Black Monday” in ’87; and a 1000% inflation mwhich has destroyed 90% of the dollar’s purchasing power.

    Let us be more specific on that last point. By 1990, an annual income of $10,000 was required to buy what took only $1,000 in 1914.4 That incredible loss in value was quietly transferred to the federal government in the form of hidden taxation, and the Federal Reserve System was the mechanism by which it was accomplished.

    Actions have consequences. The consequences of wealth confis- cation by the Federal-Reserve mechanism are now upon us. In the current decade, corporate debt is soaring; personal debt is greater than ever; both business and personal bankruptcies are at an all-time high; banks and savings and loan associations are failing.

    When one considers that the income tax had just been introduced in 1913 and that such low figures were completely exempt, an income at that time of $1,000 actually was the
    equivalent of earning $15,400 now, before paying 35% taxes. When the amount now
    taken by state and local governments is added to the total bite, the figure is close to
    $20,000, larger numbers than ever before; interest on the national debt is consuming more than half of our personal income tax; heavy industry largely has been replaced by overseas competitors; we are facing an international trade deficit for the first time in our history; 75% of downtown Los Angeles and other metropolitan areas is owned by
    foreigners; and the nation is in economic recession