re: The new federal chair

quote:

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Every so often a stimulus is put into accounts or the market to establish more trading, right? This happened a couple months ago. I'm not thoroughly educated on economy or the federal reserve. That is why I ask.

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OK it seems you have a genuine interest in this rather than just spouting stuff so I'll respond.

The Federal Reserve provides what could be considered as 'monetary stimulus'. They will buy or sell securities in the open market to either provide or take away liquidity in the markets depending on the financial conditions at the time. They also do this for normal operational reasons as well with banking repos, etc. but that's a different subject.

Janet Yellen has been Ben Bernanke's vice chairman for a long time. You can think of a Fed governor in the term of 'hawk' or 'dove'. A hawk would mean they support tight monetary policy, less stimulus and higher interest rates. A dove would mean they are more supportive of looser monetary policy, more stimulus and lower interest rates.

Both Larry Summers and Janey Yellen are doves, however Yellen is considered more dovish than Summers as she has usually been more dovish than Bernanke. Bernanke is widely viewed as a dove (Helicopter Ben, etc.) when in reality he is extremely moderate. He makes his choices of monetary policy based on data and market conditions.

Also the idea of providing government with stimulus is not really true at all in a technical sense, however that is a completely different subject all together. You can make an arguement that the Federal Reserve's easing policies have indirectly motivated the government to borrow more which I would partially agree with, but there becomes many operational issues with the Treasury market that are often ignored in that context as well.