On paper, Janet Yellen, 79, is a giant in the world of macroeconomics.
With a distinguished Ivy League pedigree (undergrad: Brown; Ph.D., Economics: Yale), she served as an assistant professor at Harvard from 1971 to 1976, when women faculty, even at Harvard, were a distinct minority. She moved to the London School of Economics and then to UC Berkeley in 1980, where she continues to serve as an emeritus professor.
Yellen has also had a stellar career in federal government macroeconomic policy. She was first vice-chairman of the Federal Reserve Board and later became its chair (2014 – 2018), the first woman to hold that coveted post. President Biden nominated her as the 78th United States Secretary of the Treasury, a confirmation that sailed through the Senate. (She is America's first woman Treasury secretary.)
But being on a panel of academic economists is one thing. Leading the world's most powerful finance ministry is another. With little private industry experience, Yellen has repeatedly floundered in the one area that makes America well-respected and feared worldwide (America's military might is another).
After two days of intense talks in Guangzhou with Vice Premier He Lifeng, China's equivalent of Treasury Secretary, SEC Chair, and Fed Chair combined, Yellen warned her Chinese counterpart about military assistance to Russia while also begging China not to flood the United States market with cheap green energy products.
It was a bizarre display of poor leadership that probably triggered smiles within the Chinese contingent as soon as Yellen's back was turned. So, it is okay for the United States to subsidize American industry with the misnamed Inflation Reduction Act when billions go to American manufacturers of green energy products, but it is improper for China to subsidize its industry similarly? On what planet does this make sense?
In the delicate diplomacy involving great powers, Yellen should not threaten "significant consequences" for China, which has the largest standing army in the world. For an extraordinarily delicate matter to Beijing, such as Taiwan, White House spokesman John Kirby reiterated on April 5 that the United States One China policy stands when he said, "We don't support independence for Taiwan," implying that as long as China doesn't employ force in the Taiwan strait, the United States is happy to let things go as they are.
So what was Yellen doing threatening Beijing about China's support for Russia? Beijing has repeatedly said that China's policy is not to provide Russia with military support. But, if the United States can give military assistance to Ukraine because America thinks it is wise to do so, why shouldn't China provide military assistance to whoever it deems worthy? China is the second-most wealthy nation in the world; doesn't it deserve some "great power respect" from the United States?
Besides, the Pentagon is already stretched thin supporting the ever-expanding NATO alliance, Ukraine's never-ending demands, and Israel. Are Americans truly ready to fight China militarily over Beijing’s potential support of Russia? We are reminded of the late General Colin Powell, former chairman of the Joint Chiefs of Staff, who was a proponent of the Casper Weinberger doctrine. "Threats of military force will work," Powell said, "only when U.S. leaders actually have decided that they are prepared to use force." Extending the Weinberger doctrine, do Americans really want another sanctions/trade war with China over its support of Russia?
Yellen should have resigned as treasury secretary when she erroneously claimed that American inflation was "transitory" in the summer of 2021. Every utterance of a person in her position can move markets and have global financial implications. Americans on the street knew how difficult life had become with rising gas and grocery prices, so how could Yellen utter something so ridiculous?
Worse, Yellen promptly supported the $6 trillion Biden boondoggle, also called Build Back Better, in a gross error as a senior economist who did not understand how flooding the U.S. economy with borrowed cash when inflation was already rising could prove catastrophic. Thanks to West Virginia Sen. Joe Manchin, to whom we dedicated an entire editorial for saving America, BBB died in the Senate in December 2021.
Four months later, under Chairman Powell, the Fed began a series of interest rate hikes to help tame inflation. Today, the Fed's Funds rate is the highest since 2001. Yellen had failed to educate Biden about inflation by playing a loyal cabinet member. It was a disastrous failure of leadership for such a distinguished economist with hundreds of analysts at the Treasury who should have seen what Manchin saw.
Yellen has also steadfastly supported Ukraine, schooled by the foolish policies of Victoria Nuland, who, stepped down recently. Under Yellen's leadership, Deputy Secretary Wally Adeyemo, another loyalist who has risen in government mainly because of his allegiance to former President Obama, has spearheaded over 2,500 Treasury sanctions on Russia, the most against a single nation in America's history. Adeyemo, who never worked in the private sector until 2017, is skilled at using the levers of government power and a microphone, where he engages in braggadocio and hype. Two years after Adeyemo's sanctions war on Russia, the Russian economy is growing faster than Germany or the United Kingdom, so much for weaponizing the dollar.
Even officials reporting to Yellen and Adeyemo don't quite understand what they are doing. America made a big splash when it announced Yellen's price cap on Russian oil 15 months ago. But, the scheme is so full of loopholes that despite lower world oil prices, in 2023, the Russian oil producer Rosneft's annual profit surged to $14 billion, a 47.2% jump. Russia has evaded the price cap mechanism by using a fleet of Russian ships that do not depend upon Western maritime insurance providers and selling to energy-hungry nations like India and China that do not share the West's distaste of Putin. Ship-to-ship transfers in the deep ocean are also common, with America unable to stop the rogue oil trade.
Anna Morris, acting assistant secretary for terror financing at Treasury, told reporters this week in New Delhi: "Once Russian oil is refined (in India, which is one of the world's largest refiners), from a technical perspective, it is no longer Russian oil. If it is refined in a country and then sent forward, from a sanctions perspective, it is an import from the country of purchase. It is not an import from Russia." Really?
These officials earn hefty salaries from American taxpayers and jet around the globe promoting Biden's silly policies. Birds of a feather, indeed, flock together. Biden has surrounded himself with incompetence. Janet Yellen is a failed treasury secretary who plays part-time diplomat. What an irony! In Biden's America, Peter Navarro, the China expert, is in jail, while Yellen is playing empty threat diplomacy. It is little wonder America has become the world's laughing stock.
