Janet Yellen just gave her last press conference as chair of the Federal Reserve before her likely successor steps into the role, and as the first woman to lead the central bank, Yellen has played an instrumental role in encouraging greater diversity within the economic and banking community. Yellen did a good job of reflecting the consensus of the entire Federal Reserve, but she also had certain topics that were especially important to her. The five following quotes from Janet Yellen reveal some of her most inspiring words she had during her time atop the Fed.
1. On dissent and critical thinking
Listening to others, especially those with whom we disagree, tests our own ideas and beliefs. It forces us to recognize, with humility, that we don't have a monopoly on the truth.
Yellen joined the San Francisco Fed branch in 2004, and her time there and her subsequent roles as vice-chair and chair of the Fed came during periods of extreme uncertainty and crisis. Given the unprecedented situations that policymakers faced during the housing boom, the ensuing bust, and the financial crisis that followed, Yellen took positions based on her beliefs, but she was willing to admit that not all of her views turned out to be correct. Experience taught her to be humble, and investors can learn a lot from their own mistakes and their need to acknowledge their limited abilities to foresee future events.
Image source: Getty Images.
2. On the need for aggressive action
If it were possible to take interest rates into negative territory, I would be voting for that.
It's difficult to take decisive action in the midst of a potentially catastrophic situation, but Yellen explored the limits of available monetary policy moves during the depths of the financial crisis. Investors often have opportunities to be decisive in their own personal financial moves, but it takes courage and dedication to pull the trigger, especially during times of uncertainty. It's essential to identify the best possible course of action and then move forward confidently to find solutions and seek rewards.
3. On the surprising magnitude of the financial crisis
I did not see and did not appreciate what the risks were with securitizations, the credit rating agencies, the shadow banking system, the [structured investment vehicles] -- I didn't see any of that coming until it happened.
Many ordinary Americans blame the Fed and its leaders for failing to understand the events that eventually led to the financial crisis. Yellen humbly admitted that she hadn't been able to foresee the magnitude of the negative consequences in store for the economy, and many other policymakers throughout the federal government made similar mistakes. Investors need to understand that they can't always count on encountering readily solvable problems, and it can take additional effort to figure out how to weather some potential storms.