Not much, it appears, if Congress remains dysfunctional and she is wedded to accommodative monetary policy and a continuation of Fed Chairman Ben Bernanke's regime.
President Obama said that Yellen “understands the human costs when Americans can’t find a job ... America’s workers and their families will have a champion in Janet Yellen.” But that is not enough.
The fundamental problem is that with Congress in disarray, burgeoning entitlement spending (including the new health insurance entitlement), one of the highest corporate tax rates in the industrialized world, and costly regulations discouraging investment, many Americans look by default to the Fed chairman to help the economy.
But the Fed cannot bail Congress and the president out of mistakes. Rather than negotiating to solve America's economic problems, they are delaying in passing a budget and leading the country to the brink of default, adding uncertainty to economic decision-making.
Congress should pass some entitlement cuts for future years to bring down long-term levels of debt, and delay individuals' requirement to purchase health insurance, just as the president has delayed businesses' requirement to provide it.
America could increase GDP growth by streamlining regulations on labor and business.
Consider that Obamacare discourages hiring, except for part-time workers.
The Environmental Protection Agency has brought out new regulations that would eventually end the use of coal-fired power plants, even though cheap energy generated by coal accounts for 40 percent of America’s electricity usage.
Into this mess steps Yellen. But neither by statute nor by actual powers can she cure all the economic ills that afflict America.
During future confirmation hearings before the Senate Banking Committee, senators should ask Yellen what it means for the Fed to do its job effectively, and how she would measure the success of the Fed’s policies.
Yellen reportedly shares Bernanke’s view that a weaker currency will help the economy. But if weak currency were an economic cure-all, then countries with the weakest currencies should have the strongest GDP growth.
America’s historical economic growth should have been greatest when its currency lost most of its value.
Nations should be able to print their way to prosperity with their inflated paper currencies. Inflation and hyperinflation should be an advantage, not a disadvantage.
But countries that have tried weak currency have not succeeded economically. In contrast, America’s stock markets have soared when the dollar strengthened.
Savers whose interest income has been decimated by the Fed's aggressive monetary easing are hurting. Losers from low interest rates are those who save and who live off of savings.
Thrift is punished, spending — especially on credit — is rewarded. The elderly who have saved money for retirement find that their bank accounts do not produce as much income as anticipated.
When inflation rises, as it invariably has done after monetary growth, the real value of nest eggs shrinks together with the value of the currency.
When all else fails and when politics stifles economic growth, people turn to the Fed chairman to help the economy, as if the Fed were populated with magicians.
Economics is not the dark art of magic, it is the cold reality of markets. Treating the Fed as a house of magicians who can cast a spell by uttering the word “care” and printing limitless money is the sign of a desperate, and thoughtless, nation.
Despite Yellen's caring personality and sterling qualifications, she cannot cure the economy by walking in Bernanke's footsteps. Congress and Obama need to make the tough decisions that will increase economic growth.DIANA FURCHTGOTT-ROTH, a Washington Examiner columnist and former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute for Policy Research. She can be reached at firstname.lastname@example.org.