This lesson introduces students to the Chair of the Federal Reserve System, Janet Yellen. It describes briefly her involvement within the Federal Reserve.
- Explore the background of Janet Yellen, the Federal Reserve Chair.
- Use previous knowledge, interests, and material from this lesson in a KWL chart activity on the Federal Reserve, Ben S. Bernanke and Janet Yellen.
- Examine the historical development of the Federal Reserve System.
- Provide background on Janet Yellen, the new Federal Reserve Chair.
- Provide additional resources for social studies teachers who wish to teach about the Federal Reserve System and monetary policy in their classrooms.
Many Americans regard the Chair of the Federal Reserve System as one of the nation’s most powerful officials, second only to the President. The influence of the Federal Reserve Chairman stretches beyond the borders of the United States, affecting the monetary policy and market conditions of nations throughout the world. Yet, to many Americans, the workings of the Federal Reserve System and the duties of the Chair are mysteries.
U.S. Economy: This website provides information on Janet Yellen that will help the students throughout the lesson.
Council for Economic Education: Teachers might consider using lessons on the Great Depression from the Council for Economic Education's Focus: Understanding Economics in U.S. History curriculum.
Who is Janet Yellen?: The KWL chart will be completed by students in the course of the lesson. Their work on the KWL will provide a record of their learning and enable you to assess their learning at the end of the lesson.
Federal Reserve Chairman: This interactive provides a timeline, with photographs, of Federal Reserve Chairman and their dates of service.
Federal Reserve Chairman and their dates of service
Start by having the students use the KWL Chart. Instruct them to fill in the first two columns with what they know, and what they want to know, about the Federal Reserve System, and Janet Yellen. Then have them work through the information in the lesson and complete the other activities.
Click here to view the photographs and dates of service of the past Federal Reserve Chairmen.
Chairmen, Dates of terms:
Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916
William P.G. Harding Aug. 10, 1916-Aug. 9, 1922
Daniel R. Crissinger May 1, 1923-Sept. 15, 1927
Roy A. Young Oct. 4, 1927-Aug. 31, 1930
Eugene Meyer Sept. 16, 1930-May 10, 1933
Eugene R. Black May 19, 1933-Aug. 15, 1934
Marriner S. Eccles Nov. 15, 1934-Jan. 31, 1948
Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951
William McChesney Martin, Jr Apr. 2, 1951-Jan. 31, 1970
Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978
G. William Miller Mar. 8, 1978-Aug. 6, 1979
Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987
Alan Greenspan Aug. 11, 1987- Jan. 31, 2006
Ben S. Bernanke Jan. 31, 2006 - Feb. 3, 2014
Janet L. Yellen Feb. 3, 2014- present
How Is the Chair Appointed?
Dr. Yellen was appointed Federal Reserve Chair through a process similar to the one used in other high level federal appointments. The Federal Reserve Act (FRA) of 1913 established the Federal Reserve System. The FRA explains who is eligible to serve on the Board of Governors and who may serve as Chair; it also sets term limits. The FRA states that to become Chair a person must be a member of the Board of Governors. This might suggest that only current Governors can serve as Chair but in fact, as pointed out by Andrew Foerster of the Federal Reserve Bank of Richmond, a candidate can be simultaneously appointed Governor and Chair. The President nominates people to serve as Federal Reserve Board Governors. Then the process moves to the Senate, where the nominee testifies before the Committee on Banking, Housing, and Urban Affairs. From there, the nomination moves to the floor of the Senate for a vote. The Chair is appointed to a four-year term. The Chair can serve several four-year terms, as did Alan Greenspan. These are a few of the "Most Frequently Asked Questions" about Dr. Yellen. If you need some help, go back to the information above.
What was Dr. Yellen's most recent appointment before becoming Chair of the Federal Reserve?
[Dr. Yellen was sworn in on October 4, 2010, as Vice Chair of the Federal Reserve System.]
What position did she hold before being appointed as Vice Chair of the Federal Reserve System?
[Prior to her appointment to Vice Chair of the Federal Reserve, Dr. Yellen served as President of the Federal Reserve Bank of San Fransico. She took the office June 14, 2004.]
What are Dr. Yellen's academic credentials for the Federal Reserve job?
[Nominees for the Chair of the Federal Reserve in the past have come from banking, government, academia, and from within the Fed. "Dr. Yellen graduated summa cum laude from Brown University with a degree in economics in 1967, and received her Ph.D. in Economics from Yale University in 1971. She received the Wilbur Cross Medal from Yale in 1997, an honorary doctor of laws degree from Brown in 1998, and an honorary doctor of humane letters from Bard College in 2000." -Fed Website, Yellen Biography.
Yellen was an Assistant Professor at Harvard University from 1971 to 1976, served as an Economist with the Federal Reserve's Board of Directors in 1977 and 1978, served on the faculty of the London School of Economics and Political Science from 1978 to 1980, served on faculty at University of California Berkeley, was the President and C.E.O. of the Federal Reserve Bank of San Francisco from 2004 to 2010, and currently also serves as Chair of the Federal Open market Committee. (Fed Website, listed in resources).]
What sort of issues does Janet Yellen specialize in, and how might that help her as Chair of the Board of Governors of the Federal Reserve?
[Janet Yellen specializes in the causes, mechanisms, and implications of unemployment. Yellen has a very specialized understanding of all aspects of unemployment, and can use that knowledge in decision making as Chair of the Board.]
Ask the students to complete the "Learned" column in the KWL chart and evaluate the information they include. Instruct them to include the following information:
- The structure of the Fed
- How the Federal Reserve Chair is chosen
- Fed Chair Janet Yellen's background
If they need additional information, send them to www.federalreserve.gov for help.
The Chairman of the Federal Reserve System is widely considered to be one of the most powerful people in the world. This lesson introduces students to the new Fed chair, Janet Yellen, while also reviewing some history and structure of the Federal Reserve System.
Using the following information about the Great Depression, as written by Bernanke, start a discussion with the students (as a class or in small groups) about the Federal Reserve's role in the Great Depression. This information provides a concise summary; however, teachers might consider using lessons on the Great Depression from the Council on Economic Education store, Focus: Understanding Economics in U.S. History curriculum .
In his book, Essays on the Great Depression, Bernanke refers to the Great Depression as the “Holy Grail of macroeconomics.” “I guess I am a Great Depression buff, the way some people are Civil War buffs," he wrote in the book's preface. "I don’t know why there aren’t more Depression buffs. The Depression was an incredibly dramatic episode– an era of stock market crashes, bread lines, bank runs, and wild currency speculation, with the storm clouds of war gathering ominously in the background all the while.”
Between 1929 and 1933, the output produced in the U.S. plummeted by almost 30%. Further, the unemployment rate surged to over 25%, and more than 9,700 American banks failed. The huge number of bank panics occurring during this period was unprecedented, prompting President Franklin Roosevelt to make his famous statement, “The only thing we have to fear is fear itself.” The reasons for the onset of the Great Depression, causing unparalleled economic misery in the United States and around the world, have been widely debated. The Fed remained remarkably passive during the onset of the Great Depression. The Fed refused to perform its function as a lender of last resort (one of the major reasons for forming the Federal Reserve in 1913) for failing banks. The Board of Governors did not fully understand the negative impact that bank failures would have on the money supply and the economy in general. Milton Friedman and Anna Jacobson Schwartz discussed this in their influential book, A Monetary History of the United States, 1867 – 1960, reporting that the Federal Reserve “tended to regard bank failures as regrettable consequences of bank management or bad banking practices, or as inevitable reactions to prior speculative excesses, or as a consequence but hardly a cause of the financial and economic collapse in process.” Further, Friedman and Schwartz note, bank failures were concentrated among smaller banks while the Federal Reserve was controlled by big city bankers that “deplored the existence” of the smaller banks. In addition, the Federal Reserve System raised interest rates in 1931, which discouraged business borrowing and caused the money supply to shrink . With so much less money to go around, businesses could not get the loans they needed and were forced to stop investing.
What does Mr. Bernanke make of all this? He fully acknowledges the failings of the Federal Reserve System during the Great Depression. In fact, at a 2002 conference honoring Mr. Friedman’s 90th birthday, Bernanke, then a Federal Reserve Governor, told Friedman, “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” The Federal Reserve ’s response to more recent financial crises, like the October 1987 stock market crash and the economic downturn following the attacks of September 11th, 2001, suggest that they have learned their lesson from the Great Depression and won’t let such an event happen again.
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