Fed's Janet Yellen gives an economic short course, beyond interest rates

Economy "is doing quite well" but "there are quite serious problems" in the long term, she said

Janet L Yellen, the Federal Reserve chairwoman, was asked Thursday night what teachers should tell students to get them excited about central banking.

Tell them about fighting financial crises, Yellen responded. After all, she noted, that is the reason the Fed was created.

That exchange, at an event the Fed billed as a town-hall meeting for educators, reflected the lasting effects of the 2008 financial crisis. Before then, Fed officials rarely talked about the Fed’s fire-fighting responsibilities. Yellen said she did not talk about them either when she was a university professor.

“This critical role of central banks as a lender of last resort is something that never got any attention when I taught money and banking,” Yellen said.

Yellen also expressed the hope, however, that central banking would not be quite so interesting in the coming years. If the Fed does its job successfully, she said, then “instead of being on Page 1, we can be back on Page 19 in the newspapers.”

The event, a reprise of a similar session three years ago, gave teachers an opportunity to speak with the nation’s top economist. A couple of dozen educators from the Washington area gathered in the Fed’s grand boardroom, where monetary policy is made, while many others joined by video conference from regional Fed offices.

Asked about her outlook, Yellen said that the economy “is doing quite well” for now, but she said that “long term, I think there are quite serious problems.”