Hand On The Lever Analysis

By Hayek’s standards, the type of financial economy portrayed in the article, The Hand on the Lever, How Janet Yellen is redefining the Federal Reserve, by Nickolas Lemann, I contend is still capitalism (yet teetering towards an oligarchy). This paper will examine why I believe it does so. Perhaps some may not interpret our current day financial economy as the purest form of capitalism, yet in essence, it is capitalism nonetheless, and Hayek’s standards remain to hold true today.

First, it is important to explain the term capitalism, as I see it, which basically is a socio-economic system, which allows for private ownership to profit from goods and services from which they provide. The “correct” definition is subjective and varies from individual

But there is no reason why a competitive socialist system should be in a better position to avoid crises and unemployment than competitive capitalism.” Lemann’s article, on the other hand, implies that Federal Reserve Chairman Yellen believes the U.S economy is capitalistic but is leaning towards becoming an oligarchy (ruled by the few elite). Yellen is quite concerned about the income inequity in society today. “The Fed, not the Treasury or the White House or Congress, is now the primary economic policymaker in the United States, and therefore the world. Everybody is watching. During the next year, Yellen has to decide how quickly to wind down the asset purchases that began five years ago; when to begin notching interest rates higher to forestall inflation; and how aggressively to supervise the big financial institutions so as to prevent another wave of expensive and unpopular government bailouts if the markets go sour. And she has to maintain her very public commitment to improve the economy as ordinary people, rather than market players, experience it.”

All that this condition amounts to, then, is that there must be some discernible regularity in the world, which makes it possible to predict events correctly.” Yellen is doing exactly what Hayek predicted would happen, trying to influence economic factors such as directing interest rates to control the proverbial bubble from popping. Yellen is the epitome of the Keynesian theory, which is to manipulate economic conditions and steer it into a particular direction (i.e.: lowering interest rates and stave-off unemployment). “The founding patriarch was John Maynard Keynes, Yellen’s hero. Keynes was a member of the Bloomsbury group. His published work would not pass muster with a tenure committee in a contemporary economics department; there are few formulas in “The General Theory of Employment, Interest and Money.” But he came up with what might be the most successful liberal idea of the past century: that central governments, through spending, taxes, and manipulating interest rates, could prevent the periodic