Although we work through financial markets, our goal is to help Main Street, not Wall Street.
Janet YellenRead
We need to keep in mind the well-established fact that the full effects of monetary policy are felt only after long lags. This means that policy makers cannot wait until they have achieved their objectives to begin adjusting policy.
Interpretation
What this quote means
Monetary policy effects take time to manifest, so adjustments must be proactive.
Janet Yellen emphasizes the importance of timely action in monetary policy. This quote highlights that the effects of policy changes are not immediate; therefore, policymakers must anticipate future conditions and make adjustments before objectives are fully realized to effectively manage the economy.
Themes
Monetary PolicyEconomyTimelinessPolicy AdjustmentLagging Effects
In practice
Example use cases
In a speech addressing economic strategy, a policymaker might use the quote to illustrate the importance of proactive monetary policy.
More from Janet Yellen
All quotes →A clear lesson of history is that a 'sine qua non' for sustained economic recovery following a financial crisis is a thoroughgoing repair of the financial system.
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Transparency concerning the Federal Reserve's conduct of monetary policy is desirable because better public understanding enhances the effectiveness of policy. More important, however, is that transparent communications reflect the Federal Reserve's commitment to accountability within our democratic system of government.
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For decades, the pace of technological change in manufacturing has outstripped that in the economy as a whole. And, so, firms - manufacturing firms - have found it easier to continue producing by - with - reducing their workforces.
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Inequality has risen to the point that it seems to me worthwhile for the U.S. to seriously consider taking the risk of making our economy more rewarding for more of the people.
Janet YellenRead
In government institutions and in teaching, you need to inspire confidence. To achieve credibility, you have to very clearly explain what you are doing and why. The same principles apply to businesses.
Janet YellenRead
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Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials.
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Economic policies absorb almost the entire attention of government, and at the same time become ever more impotent. The simplest things, which only fifty years ago one could do without difficulty, cannot get done any more. The richer a society, the more impossible it become to do worthwhile things without immediate payoff.
E. F. SchumacherRead
Government control of the economy, no matter in whose behalf, has been the source of all the evils in our industrial society -- and the solution is laissez-faire capitalism, i.e., the abolition of any and all forms of intervention in production and trade, the separation of State and Economics, in the same way and for the same reasons as the separation of Church and State.
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Why do we fully tax some kinds of income from capital, like interest and dividends; partially tax other kinds like capital gains; defer tax on other kinds, like IRAs; and impose no tax at all on still other types of capital income, like interest on municipal bonds? This simply is not rational. These distinctions don't have any inherent logic.
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Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.
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True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Ludwig Von MisesRead