As we near the 100 year anniversary of the Federal Reserve System in the United States, its recent actions and uncharted future leave us to ask WWJD. “What Would Jackson Do” with the news of the long existence and operation of the Federal Reserve System? Would he roll around in his grave if he knew that in a little more than one month, a third version of the system he fought tooth and nail is going to be celebrating one century of operation as the US Lender of Last Resort (one of the many titles given to the central bank)? Or would he muster up a smile as the clock struck midnight on December 22? The truly curious individual need only dust off a keyboard somewhere and go search the history of Jackson and “the Bank,” and he will find copious amounts of information to help decide that answer.
Regardless of what Jackson would have done however, without him around the Federal Reserve is approaching a key moment in its aging life. A change of leadership is in the works, and it is coming on the heels of some very shaky financial times for the US and the world. The next chapter of the Federal Reserve is sure to be action packed as the world heads into uncharted financial territory. Each year there seems to be another debt-ceiling crisis, another major natural disaster, or another outbreak of violence in the middle east, and the financial impact of these issues along with increased global integration spell a very interesting future for the Federal Reserve System and its leadership.
As 2013 draws to a close, President Obama has named Janet L. Yellen as the successor to Ben Bernanke, and if she survives what could be a volatile senate confirmation hearing she will be leading the central bank into an extremely precarious future. Yellen hails from Brooklyn, New York and boasts a Ph.D. from Yale University. She has gone from serving as an economic advisor in the white house during the late 90’s to heading up the San Francisco Federal Reserve, becoming CEO in 2004. From there Yellen found her way onto the Board of Governors for the entire system and has just recently received the nomination from President Obama to succeed Bernanke.
The financial situation being what it presently is in the US, Yellen seemed optimistic in her remarks to the committee on Banking, Housing, and Urban Affairs. She expressed her gratitude and great appreciation in being named to a post of such immense responsibility. She proceeded to speak flowery words regarding how the Federal Reserve handled the crisis of 2008 and the years following, up until the present state of the economy. She openly recognized the level of influence the FED holds, saying “Its decisions affect the well-being of every American and the strength and prosperity of our nation. That prosperity depends most, of course, on the productiveness and enterprise of the American people, but the Federal Reserve plays a role too, promoting conditions that foster maximum employment, low and stable inflation, and a safe and sound financial system.”
Many a learned man, including Mr. Jackson, the Bank-killer himself, would argue that decentralization would be the most efficient way to accomplish the lofty goals which the central bank is aiming to achieve, but at this point in the timeline it seems that even Jackson himself would have his hands full wrestling with the financial issues facing both the bank and the nation in 2013 and beyond. So what would Jackson do? Who knows, he certainly wouldn’t be happy, but even if the bank disappeared overnight, there would still be significant problems to be addressed. Seeing as the swift disappearance of the institution seems unlikely, the question people will be left asking now is WWJD, What Will Janet Do, and Federal Reserve supporters along with its harshest critics will both be keeping a watchful eye out for the answer to that question.
By Daniel JustDaniel