Thursday, January 23, 2014

If the Shoe Fits

Who is Janet Yellen? A recent Huffington Post article asked people wandering the streets this question, and the results were quite scary.
This is Janet Yellen
48% of them believed she was from a cartoon show (Scooby Doo was the most popular).

42% thought she was the person that had the affair with former President Bill Clinton.

Only 10% of the 1,000 people polled knew that she was the new chairwoman for the Federal Reserve.
Thats pathetic.

But when you further examine the 10% who knew who Janet Yellen was, their opinions of her were quite grim.

Over 70 people believed that since Yellen was a woman, she would not be able to do a proper job as the head of the Fed, arguing that women are unable to keep up with D.C., politics, and the world.
I don’t know what’s worse: the public perceiving Yellen as Scooby Doo’s sidekick or the public’s lack of faith in her ability to head the Fed.

So, Can Janet Yellen perform well as the head of the Federal Reserve even though she is a women?
Yes, her gender makes no difference, Janet Yellen will be a perfect fit to leadership of the Fed because of her three major ideals: bond bands, the happiness principle, and regulatory issues.

What is The Federal Reserve, you may ask? The Fed is the central banking system for the United States that establishes monetary policy, which includes things like setting interest rates and inflation levels. Basically, The Fed controls money in the U.S. and tells other banks what to do. In the long run, The Fed has three main goals which are:  stabilize prices, maximize employment, and keep interest rates low.

Previous chairpersons of the Fed, like Ben Bernanke, found it difficult to accomplish these three goals because of the delicate balance required. While Bernanke failed at the top three things on his to-do list, he was still able to develop somewhat decent monetary policy. His successor, Janet Yellen may lack in her monetary policy, but she has the toolkit to fulfill the three main goals of the Federal Reserve.

First, Yellen makes palatable attempts to stabilize prices. In 2003, the United States sold roughly $500 billion in bonds (Government bonds is the way the US borrows money) to China, when the Dollar to Yuan conversion was $1= 3 Yuan. In 2008, just before the stock market crash, China sold these bonds back to the United States for a little less than $1.3 trillion. The United States had to pay more than double of what the original value of the bonds were worth for two reasons. The first reason falls on the shoulders of China. China during this 5 year period has purposefully devaluated their currency by 100%. With the 2003 transaction being done at a ratio of $1= 3 Yuan, 5 years later it was completed at a transaction of $1= 6 Yuan. In the end China was able to double of their returns by purposefully devaluing their currency. However, the second reason is the United Statesfault. Prior to the 2008 bond trade (and even today) the United States Federal Reserve has failed to make a basic monetary policy: that all transactions will be done in Dollars. The reason why this is crucial is because the Dollar is the most stable currency in the world and thus is the baseline currency in which trading between nations, even not involving the United States, follow! With Janet Yellen as the Federal Reserve she vouched in her confirmation speech for tighter trading monetary policy so that if a nations currency fluxuates by more than 5% a fiscal year (Chinas fluxuated by 20%) then they will not be allowed to buy United States bonds, but also that all transactions with the United States must occur in Dollars so the United States will not fall victim to money manipulation again. Thus this in return helps with the fundamental goal of stabilizing prices in the bond market not only for the United States, but world as a whole.

Second, Yellens happiness principle will help maximize employment. It’s simple: the more you pay someone the happier they will be. The happier an employee is, the more efficient they work. To achieve this, she has mandated that all federal employees must be paid over minimum wage. More money, more happiness, more efficiency. She furthers this principle by stating that maximized efficiency means more people will have to be hired since the production rate can skyrocket, and this effect from the federal level will trickle down to the private and public sector. With the federal government being able to employ and increase efficiency there will be more people able to essentially perform daily actions and purchase necessary goods which will stimulate the private and public sector. The essence of trickledown economics is utilized by Mrs. Yellen in this scenario of initiating the happiness principle and to hopefully maximize employment and fulfill the second goal of the Federal Reserve.

Third, Yellen seeks to combat regulatory issues. It is a well-known fact that the 2008 stock market crash has to do with the banking industry, but to what extent many people dont understand. In the 2008 stock market crash we witnessed a rather fraudulent practice. Investment banks were borrowing money from savings banks in order to invest the money into “promising” foreign markets. But when those foreign markets crashed, the money that was taken from savings banks was essentially gone. The reason why the investment banks had the opportunity to even invest the savings bank money was because the two were merged together. In 2008, the investment and savings banks were united and thus the cash for both were sitting in the same place. Janet Yellen is striving to implement monetary policies combating regulatory issues and is pushing Congress to reinstate the Glass–Steagall Act. By implementing the Glass-Steagall Act, investment banking and savings banking would be separate and the opportunity for the banks to crash in the same way they did in 2008 would be significantly less possible.

Regardless of the policies, principles, and ideals that Janet Yellen is bringing to the Federal Reserve as its new head it is crucial that you as an individual make the decision of whether she will be a good fit or not. Disagreement with her beliefs and policies are reasons to discount her; her gender, however, is not.

Monday, January 20, 2014

The Promise of Politics

“The best argument against democracy is a 5 minute conversation with the average voter”  - Winston Churchill.

That line is oft repeated jokingly when talking about our government, like when our government shutdown, and when traffic jams had a higher approval rating than congress.

Another such line many people repeat is “Suppose you were an idiot, and suppose you were a member of congress; but I repeat myself” – Mark Twain.

We hear this when congress fails to pass a bill to enact universal background checks on all gun sales, an issue that has over 90% support from the public.

Right now, our politics are in an age of pessimism. This is reflected in our news. A news outlet recently put out a story with the headline “CONGRESS’S APPROVAL RATING INCREASES BY 33%! What you don’t see in that headline is that congress’s approval rating rose from 12% to 16%. That’s pathetic.
The sad truth of Congress

When was the last time you remember Congress doing something amazing? Something that actually helped you out? Something that changed society for the better? That’s a hard question to answer. Yet, when you rearrange the question to ask: Who can help me out the most in my life? Who can remedy the public failures that are at the root of so many ills?

When you ask the second question, there is only one answer. The government. Yes, our politics of pessimism tell us otherwise, but congress has the capability to do great things. That’s why we elect them. That’s why America has had a stable government since the day the constitution was enacted.

An example of this might be the CAFE (Corporate Average Fuel Economy) standards passed in 2011. It mandated that all cars built by 2025 have a gas mileage of at least 54.5 Miles. This change will increase the price of a car by about $2,000 but will lead to savings of over $6,600 in the lifetime of a car.

This is a drastic shift that affects every single one of us. Yet, who knew that this had happened? It doubles the gas mileage of almost every new car in America, makes our lives easier, and reduces our reliance on foreign oil. But who has called their congressman and congratulated them on these new standards?

Instead of looking at what Congress has done, we are focusing on what they have failed to do. They have failed to fix America’s broken immigration system, they have failed to deal with gun violence, they have failed address the future of Social Security, Medicare and Medicaid. They even shutdown the government over a failure to compromise.

Compromise isn’t a dirty word it’s a beautiful one. We shouldn’t shun those who work to find a consensus, we should embrace them. Being morally pure and only voting with your party is what both Democrats and Republicans like, but common sense solutions are what America needs.

Politics is the art of bringing people together to find consensus. It isn’t gerrymandering districts or raising enormous sums of money for reelection. I still believe that Barack Obama was right when he stated, “There isn’t a red America, or a Blue America. There is only the United States of America.”


That’s why I like politics. When politicians work together, and put country over party, great things can emerge. We need to ensure they do, and political participation by everyone is the best way to do so.

Thursday, January 16, 2014

Here it goes

This shall be my first attempt to just provide the layman a view into the political world with some analysis. After many recent events people have just become curious as to what is happening and I hope that I can help you divulge into the path that is known as Politics: Mishaps and Blunders.



Okay so as many of us know this guy called Chris Christie is clogging up the interwebs of many of our favorite sites: CNN, Politico, Reddit...you know whatever you're into. And recently (today) I was on CNN and ran into this little excerpt from them, 
Illustrious Governor Chris Christie
"Give him a position at the top of the agency; he's a good friend of 
the governor. That's how David Wildstein was introduced to the 
Port Authority of New York and New Jersey in 2010, according to 
a former employee with extensive knowledge of the agency's hiring 
practices. Soon after, Wildstein was named the director of 
Interstate Capital Projects, a title that previously had not existed at 
the bi-state agency, setting in motion a career that would 
eventually place the former political blogger at the center of the 
lane closures controversy at the George Washington Bridge."

Let us put aside the fact that Chris Christie, Governor of New Jersey and potential Republican presidential candidate for 2016, is caught in many scandals right now involving both closing bridges to cause traffic and also misusing funds for Hurricane Sandy, and rather let's talk ethics. 

Is it ethical to place a good buddy of yours into a rather high position in society, when they have no real political knowledge? I'm going to take the generic route and say yes, it is highly unethical because you are placing a man (or woman) who has no knowledge in the field and has control over hundreds/thousands of people. Inevitably something is going to go wrong, such as Christie's scandals, or Rick Perry appointing his former Yell Leader buddy as the head to the Texas Board of Education.

News flash: in the state of Texas you no longer have to take Algebra II or speech in a couple of years thanks to Governor Perry's dear friend. This in return is causing massive whiplash from teachers around the state and thus tarnishing the idea that appointing a buddy to government positions is unethical. 

But what if it isn't...what if having a buddy in a political position is actually good for you, but ethics tarnishes it?

Dr. Sanjay Gupta
Now I love Sanjay Gupta, but I think his ethics 
may have caused him from having me and the rest of the United States from loving him more. President Obama wanted to have him as his Surgeon General, but citing ethical implications along with other things he turned it down, thus causing Obama to appoint Regina Benjamin (who resigned in July). Now usually I would have been alright with this, but the Surgeon General is not supposed to have political bias, which Mrs. Benjamin was ripe with thus causing her to resign, but if ethics was not to have been in existence would Sanjay Gupta have taken it? If Chris Christie and Rick Perry not have messed up this much would it have been ethical to appoint a close friend to high governmental positions?

Just some food for thought.