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Why I’m glad Yellen was tapped to run the Fed

With their PhDs and economic jargon and mysterious market-moving meetings in Washington, D.C., the Federal Reserve may seem pretty far removed from the day-to-day finances of the average person.

But there are few humans on the planet who have more power over the economy we all live and work in than the chairman of the Federal Reserve. Their decisions affect the rates we get on financial products almost all of us use — mortgages, credit cards and investments — and the health of the labor market where most of us earn the majority of the income we depend on.

With so much at stake, I’m glad Janet Yellen got the nod to be the next chairman. I’m sure she’ll make her share of mistakes just like any chairman, but here’s why I think she’s better than some of the other candidates that were floated, including economist Larry Summers:

Also, I have to admit that as the father of two lovely daughters, I’m pretty excited to see the first ever female nominee for Fed chair.

Still, even with these qualifications, getting Yellen through the confirmation process won’t be easy. And there’s no way of knowing if, when the time comes, Yellen will be able to manage what’s going to be a huge drawdown of monetary stimulus out of the economy. The Fed’s balance sheet is currently at $3.75 trillion and rising, and at some point it’s going to be time for the Fed to slow down and reverse all the money it’s been pumping into the economy by buying up mortgage-backed securities and Treasuries.

While controlling inflation isn’t a big concern right now, that could change rather suddenly, and Yellen will have to be on top of it.

What do you think? Is Yellen a good choice? If not, who would you have liked to see instead?

Photo credit: Reuters/Robert Galbraith