History tells us of many men and women who showed early signs of excellence and genius. Poland happens to be full of such pioneers. Perhaps the most well-known is former pope, John Paul II. From early on, his piety and deep religiousness made a big impression on his peers.
A woman predicted that this young man, who lived on 7 Kościelna Street, Wadowice, would one day become the head of the Church of Rome, even though Poland was part of the Soviet ecosystem, and it was difficult, if not impossible, for one of its priests to reach such a position.
His compatriot of Polish roots, Janet Yellen, born to a father who worked as a doctor and emigrated from Poland to the United States to escape the Holocaust, had also been on the path of excellence from a young age.
Academic excellence
In 1962, Yellen graduated from Fort Hamilton High School in Brooklyn’s Bay Ridge neighbourhood, south of New York.
She later joined Brown University to study philosophy and history but switched to economics before graduating with distinction and winning honours at Pembroke College in 1967.
Then she joined Yale University where she obtained in 1971 a doctorate in economics; her thesis, on employment and unemployment, was entitled “Employment, Output and Capital Accumulation in an Open Economy: A Disequilibrium Approach.”
Her studies were conducted under the supervision of James Tobin and Joseph Stiglitz, the Nobel Prize laureates for economics; the latter described her on one occasion as “one of my brightest students.”
The number of economists who obtained a doctorate from Yale University in 1971 reached 22, and Yellen was the only woman economist among them.
Yellen's studies were conducted under the supervision of James Tobin and Joseph Stiglitz, the Nobel Prize laureates for economics; the latter described her on one occasion as "one of my brightest students." In 1971, she was the only woman to graduate with a doctorate in economics from Yale.
A brilliant career start
After that, Yellen started work. The beginning was at Harvard University's Faculty of Economics as an assistant professor from 1971 to 1976, and then as an economist in the Federal Reserve's Board of Governors between 1977 and 1978.
It was there where she met her future husband, George Akerlof, an economist and a Nobel Prize laureate in economics, a professor at Georgetown University, and professor emeritus at the University of California.
After marriage, they moved together to teach at the London University of Economics and Political Science between 1978 and 1980. Upon returning home in 1980, Yellen joined the University of California to teach at the Haas School of Business.
During her university teaching career, Yellen focused her writings on unemployment, labour, monetary and financial policy, world trade, and the economic consequences of German unity – some of the writings were coauthored by her husband.
In one of these studies, entitled "Efficiency Wage Theories," Yellen explained that the idea of paying higher-than-market wages would result in an increase in productivity because workers who earn less than what they consider to be fair pay would work less hard in retaliation to their employer.
Special recognition from Bill Clinton
In 1994, the Senate approved President Bill Clinton's proposal to appoint her as a member of the Federal Reserve's Board of Governors. The president introduced her, saying, "She's one of the most prominent economists of her generation who worked at the intersection of macroeconomics and labour markets."
Yellen ended her term at the Federal Reserve's helm with the lowest unemployment rate since the end of World War II.
During her tenure, Yellen presented academic research to then-Federal Reserve Chairman Alan Greenspan, concluding that adjusting the inflation rate to about 2% instead of zero% provided a better basis for reducing unemployment and stimulating economic growth.
During her tenure on the Federal Reserve's Board of Governors, Yellen presented academic research to then-Chairman Alan Greenspan, concluding that adjusting the inflation rate to about 2% instead of zero% provided a better basis for reducing unemployment and stimulating economic growth.
In early 1997, Clinton appointed her chairwoman of the White House Council of Economic Advisers, replacing her teacher, Professor Joseph Stiglitz – she was the first woman to hold that high position.
A people's advocate
In 2004, Yellen was also the first woman to be appointed head of the Federal Reserve in San Francisco and later a member of the Federal Open Market Committee, which is tasked with developing policies.
After taking office at the Federal Reserve, Yellen wrongly ignored concerns about the possible consequences of a boom in house prices. While she did raise alarm over banks' focus on financing risky construction and housing loans, her move through the Federal Reserve to control the overspread of random housing lending was flawed.
In 2010, President Barack Obama proposed her appointment as a successor to Donald Kohn as a member and vice-chairperson of the Federal Reserve; this won the approval of 17 members versus six members in a Senate Banking Committee vote – she became the second woman to hold the post after Alice Rivlin.
The main opponent to the nomination was senior Republican Senator Richard Shelby of Alabama, whose argument was her lax stance on the housing issue and her failure to rein in the mortgage bubble's inflation.
In 2014, Obama nominated her as the first chairwoman and the 15th chairperson of the Federal Reserve, succeeding Ben Bernanke, and said in presenting her nomination that she was "one of the most prominent economists and policymakers in the country," adding that "American workers and their families will have a champion in Janet Yellen."
Yellen began her mandate by addressing the issue of low interest rates, which was one of the causes of the mortgage crisis. On 17 December 2015, the first rate hike since 2006 took place, a departure from the Federal Reserve's controversial previous policy, known as "Greenspan put."
Thereafter, the interest rate was raised four more times during her tenure, to 1.25-1.5%, a rate that remained well below historical rates.
In 2014, Obama nominated her as the first chairwoman of the Federal Reserve. He described her as "one of the most prominent economists and policymakers in the country," adding that "American workers and their families will have a champion in Janet Yellen."
The second thing Yellen worked on was the job market. During her tenure, the unemployment rate fell from 6.7% to 4.1%, the lowest level in 17 years. She ended her term at the Federal Reserve's helm with the lowest unemployment rate since the end of World War II.
In contrast, inflation remained below the stated annual target of 2%. These two achievements prompted her to be included in the list of the most successful Federal Reserve chairpersons.
Yellen once stated her goals: although she's been involved in financial markets throughout her career, her primary goal in economic affairs and citizen service remains to focus on Main Street, not the street that "leads to the wall" (Wall Street) – in a clever hint of the difference between the two, and where each leads.
"Keeping interest rates low; making homes affordable; reviving the housing market; lowering the cost of starting, expanding and hiring for businesses; and lowering the cost of buying a car – all enable a worker to go to work and take their children to school, and allow families, in general, to help pay for the things they need; increased spending will create jobs and, consequently, boost spending and economic recovery."
On 2 February 2018, Yellen handed over the helm of the Federal Reserve to its new president, Jerome Powell, and moved to the Brookings Institute to join its Hutchins Centre on Fiscal and Monetary Policy, hence, returning to the world of studies and research, holding seminars, and publishing articles in the media.
Three positions of glory
But Yellen was quickly called back to public service in early 2021 as Secretary of the Treasury under President Joe Biden, who in her nomination described her as "one of the most important economic thinkers of our modern era, having spent her career focusing on employment and worker dignity."
She was the first woman in US history to hold this high-level financial position. His deputy, Kamala Harris, described her as "the first woman in American history to head three of the highest economic positions in the federal government: The Federal Reserve, the White House Council of Economic Advisers, and now the Treasury Department."
The second thing Yellen worked on was the job market. During her tenure, the unemployment rate fell from 6.7% to 4.1%, the lowest level in 17 years. She ended her term at the Federal Reserve's helm with the lowest unemployment rate since the end of World War II.
Biden's team praised her for being the first treasury secretary who hadn't set foot in Wall Street or the private sector, and is considered a Keynesian (relative to the British economist John Keynes) from head to toe, as she values reducing unemployment and driving growth – hence, she's likely to boost subsidy policies.
In 2014, Forbes named Yellen the second most influential woman in the world.
During her tenure at the Treasury Department, Yellen presented a proposal to set a minimum threshold for the corporate tax rate worldwide. This initiative aims to reduce tax-exemption competition among different countries and tax evasion.
The proposal was welcomed by the International Monetary Fund, the European Commission, the Organisation for Economic Cooperation and Development, and G7 finance ministers – the ministers recommended a minimum global corporate tax rate of at least 15% as part of a historic deal to modernise the international tax system and create a "more stable and equitable international tax structure."
Sanctions put the dollar at risk
The thorny thing that has occupied Yellen from the very beginning has been that of raising or suspending the US debt ceiling before reaching the legal limit. She has repeatedly warned against the matter, pursued it seriously and persistently, and finally it was passed in Congress.
Yellen was also a key proponent of a cap on Russian oil prices to deprive Russian President Vladimir Putin of an important source of funding for his war on Ukraine. The G7 alliance, the European Union, and Australia endorsed her opinion and decided to put a cap on the price of Russian oil at $60 a barrel, 5% below average market prices.
Biden's team praised her for being the first treasury secretary who hadn't set foot in Wall Street or the private sector. In 2014, Forbes named Yellen the second most influential woman in the world.
She also advised collective hedging of the risks of supply chains of goods from authoritarian countries such as Russia and China.
In an article published in Project Syndicate in December 2022 under the title "Resilient Trade," she identified the main risks to the global economy and ways to protect against geopolitical and security risks from hostile countries. She called for moving away from supply chains that violate basic human rights.
Despite this, she acknowledged in one of her interviews with CNN that economic and financial sanctions linked to the dollar and imposed by the United States on Russia and other countries, endanger the dominance of the dollar, as targeted countries seek alternative currencies.
The dollar is used as a global currency due to the advantages that the United States enjoy and other countries lack, such as robust and sophisticated capital markets, as well as the rule of law.
During the recent banking crisis in her country, Yellen appeared on CBS' Face the Nation; she reassured her compatriots that regulators are closely monitoring the state of the banking system to ensure capital adequacy and control risks.
Speaking about the collapse of Silicon Valley Bank, she said she was working with regulators to "design appropriate policies" she didn't want to disclose.
However, she revealed several days later in a speech to the Bankers Association conference that she supported the actions taken by regulators to avoid a full-blown banking crisis.
Uninsured bank deposits, which exceed the maximum limit set by the law ($250,000) can be protected only if the bank that has failed poses a comprehensive risk to the financial system, she said; decisions in this regard deal with each case, one at a time.
She also announced the proposal made by the Financial Stability Oversight Board to consider non-bank financial companies as financial institutions within the regulatory framework and subject them to the Federal Reserve's supervision.
Digital currency with conditions
On 7 April 2022, Yellen announced, for the first time, during a meeting at the American University's Kogod School of Business, plans to issue a central bank digital currency, i.e., a digital dollar.
The move would be accompanied by studies on its impact on monetary policy, national security, international trade, and the interests of consumers and dollar holders – it's a path that, in her view, may take some time.
She outlined the framework governing mobility with and handling of digital assets in the US economy as follows:
First: The importance of the US financial system benefiting from responsible innovation.
Second: The need to keep pace with the development of this system of technology and innovation.
Third: Regulations should focus on associated activities and risks, not just on technology.
Fourth: The importance of maintaining sovereign money at the core of the financial system.
Fifth: The importance of launching a collective dialogue between the various groups concerned with the digital currency project.
Yellen boldly calls for the modernisation of the international financial institutions that emerged from the Bretton Woods conference, held at the end of World War II, to lay the foundations of the post-war monetary, financial, and economic system; she wants these institutions to effectively meet the challenges of the 21st century.
On one occasion, Yellen stated that she had been collecting stones since the age of eight, showing an early tendency to study geology, and has more than 200 different stone samples.
Over time, Yellen's holdings have diversified to add, since her school days, dozens of American and international awards, medals, and accolades in the field of excellence, economics, money, and finance.
