sunrises here, frank's workday is done. the key he says is to get up the next morning and do it all over again. >> thank you for watching. al jazeera america. i'm del walters in new york. "inside story" is next. >> i'm ray suarez. here is the "inside story." ♪

hello, i'm ray suarez. in her first testimony before the house of representatives, as federal reserve chair, janet yellen told the committee members a few things, the recovery of the labor market is far from complete. the bank expects to continue cutting back its monthly shot of adrenalin to the u.s. economy. the gyrations of the stock markets worldwide don't pose a substantial risk to the economic outlook. the new chair, herred ins about the economy, and the outlook given congressional committees on this edition of the program. the newly minted chair of the federal reserve said the economy has made substantial improve over the past four years. >> sin the financial crisis in the depths of the recession, substantial progress has been made in restoring the economy to health, and in strengthening the financial system. still, there is more to do.

too many americans remain unemployed, inflation remains below our longer-term objective, and the work of making the financial system more robust has not yet been completed. >> yellen said if the any continues to show improvement, the ed fed will likely again reduce its asset purchases. called quantitative easting, the bond buying program is slipping tens of billions of dollars a month into the economy as stimulus. as jobs return, and other positive signs come, yellen said the fed would likely taper. >> the purpose of quantitative'sing, we have been buying longer--term securities, the objective has been to push down longer-term interest rates, and i believe we have succeeded

in doing that. the purpose is disburse spending in the economy, and achieve more rapid economic growth. this program is not on a preset coarse, which means if the committee judges there to be a change in the outlook, that it would reconsider, it would reconsider what is appropriate with respect to the program. >> it was congratulations all around from the members on the historic precedence set by yellen's appointment to the chair. >> in the 100-year history of the federal reserve there has been only 15 fed chairs. you are the first woman to lead the fed or any major central bank. we are so proud of you. >> thank you. >> but there was always some hazing of the new face. >> so that begs the question today using your words, are you

a sensible central banker and if not when will you become one? >> congressman i believe i am a sensible central banker, and these are very unusual times. >> she seemed prepared and unflappable in the face of pointed questions from the committee over banking rules and lingering unemployment. there was also praise for her forthright style. >> i have been on this committee for many, many years and understand more what you said today than i have the last two folks in front of us. so thank you for that. >> pressed with questions about how the fed can help the economy even than it is doing now, yellen held to the unwritten rule of such appearances. make no news. >> is this qe, quantitative easing, in this huge position that the fed has taken -- i question -- i think it's become a deficit enabler.

i would be interested to hear your response on that. >> so we're very focused on achieving [ technical difficulties ] >> -- running well below our 2% objective. i don't think it would be helpful either in terms of achieving the objectives that congress assigned to us, or in terms of deficit reduction efforts us to purposely raise interest rates in order to improve the economy -- >> and the markets, which traditionally hang on every word of such hearings and often react with volatility, instead moved

slowly upward through the day. [ applause ] >> my constituents absolutely can't understand why -- >> representative michele bachmann pressed yellen on a view held by some members of the g.o.p. that the fed is not transparent and should be subject to audit. a notion yellen did not oppose. we are audited, she replied. however. >> what i don't agree with and would strongly oppose is interfering with the independence of monetary policy by bringing political pressures to bare on the committee's judgment about what is the appropriate way to implement monetary policy. >> a democrat from texas was focused on the growing inequality in the country, and asked is this is stifling economic growth. >> i think it's one of the most important issues, and one of the

most disturbing trends facing the nation at the present time. [ technical difficulties ] >> -- i think we don't have certainty about that. but certainly rising inequality is not -- is partly a matter of a weak job market that we're trying to address, but there are deep and disturbing longer-term structural trends. >> throughout her testimony she repeated the duel mission of the federal reserve, stable prices and improved employment. she says the economy is improving, and for now the fed plans to stay the course. ♪

does it matter whether one administration-picked economist or another ends up at the fed chair? what impact in the next few years of her term could a fed led by janet yellen have on your life, on the operation of the american economy, on your savings. >> joining us is a senior economist with bloomberg, a chief market economist, and financial policy advocate with public citizen, a watchdog organization that holds government accountable. let me start with you. if people are sitting at home watching this program thinking, all right there is janet yellen. she is in charge you. what difference could she make, does she make on their lives? >> one of the charms of janet yellen is that she seems to event a continuation of fed

policy, and also the leader of the shift starting in the last year in terms of the taper, and finally getting the economy back to normal operating procedure. so i think what she represents a real economist, talking about a real economy, and how the fed is going to lead this economy. >> peter one of the first stories posted when she concluded her testimony said her opening statement could have been ben bernanke's closing statement a few weeks ago. does it make a difference to have janet yellen in charge? >> it is going to make a difference, because she is basically continuing bern bernanke's policy. and it will make a difference in the sense that she proved to be quite efficient today, her first time giving a congressional testimony. she basically answered in a very strongly fashion, a very simple

way, and i think that -- that that's great. that means that we're going to see the fed become more transparent. and i kind of believe that that is going to be quite good in terms of people understanding what the central bank is trying to do. and there's no question that, you know, she's going to be a very open fed chair lady, someone that you can understand, and i think that she has made that very clear to the markets, and, you know, the markets are the best barometer of -- of indicating whether or not they are going to have a love affair. and i think with today's positive market reaction, the answer is yes. >> what are the hallmarks of the yellen philosophy? what should we know about what she sees when she looks at the operation of the economy. >> i think the course that janet

yellen has taken into the position of chair has -- has in one sense taken off some of the edges of a truly personal fed chair. you ask if yellen will be different than bernanke, and i think the answer is maybe not. imagine what it is to be the fed chair from where you came. and in yellen's case she was on the fed and was a regulator in san francisco as well. in bernanke's case he was at princeton. and they are parachuted into the federal reserve where there are some 20,000 employees where it is difficult to exercise one's id you synchrosies, and we haven't been able to see yellens id you synchrosies yet. >> well, what can you expect in

the coming years, in a janet yellen-lead fed. when we come back, we'll talk about just that. this is "inside story."

al jazeera america. we understand that every news story begins and ends with people. >> the efforts are focused on rescuing stranded residents. >> we pursue that story beyond the headline, pass the spokesperson, to the streets. >> thousands of riot police deployed across the capital. >> we put all of our global resources behind every story. >> it is a scene of utter devastation. >> and follow it no matter where it leads - all the way to you. al jazeera america, take a new look at news.

>> welcome back to inside story, i'm ray suarez. welcome back to "inside story." i'm ray suarez. janet yellen took the hot seat on capitol hill and calmly answered question. her message: stay the course. the economy is improving, unemployment is dropping, and inflation is not a threat. and peter she said inflation is too low, below our long-term goals. people who watch this closely may think, inflation is a bad thing, how could it be too low. >> well, the opposite of

inflation is deflation. and that's never good for an economy. i think what she was trying to say there is while the united states is not in a danger zone of entering inflation, that inflation is low. and it's like -- you -- inflation at times, it's like preparing a good meal, you need spices to it, and if you have an economy that has no inflation, well, that can also pose a problem in the sense that, well, we all know, in terms of corporate earnings, it's a struggle to keep those corporate earnings up there, if you can't pass on price increases. also if things get too low, obviously the profit of margin shrinkings. so i think what she is saying is we need to get inflation just a little bit higher, but certainly not to the point where it would be destructive in terms of

eating away at the value of the currency or eating away at the value of -- for instance, your home. and so from that perspective, i think that she's correct, and -- and -- and i don't think she's saying that she is going to do anything to propel inflation higher. by the way, you know, many of the critics of quantitative easting was that that would have brought on a lot of inflation. well, you know, that has not happened, and so that's not going to happen until we get, you know, the global economies really propelling at a stronger rate of growth. >> as peter notes for years now, during the quantitative easing period, federal reserve is basically creating money, injecting it into the financial

system, and the threat was this is going to unleash inflation. inflation was just around the corner, well it never got here, or hardly did. why not? >> presumably because the economy is in such doldrums. there is money in the economy. i think i saw a count of $1.4 trillion in deposits that hadn't been loaned out. so there is money to be circulated were there demand. if there were fewer people who were underwater on their mortgages and felt confident enough to consume. and quantitative easing was invented because all of the other traditional tools had run out. we're at such low interest rates that what else is left? she is under pressure from koys to ease that under this phantom

fear of inflation which hasn't emerged. the tools of the federal reserve are too modest in the face of that. >> if you had money in accounts that had like checking with interest, if you had retirement investments that featured bonds because they were safe and secure, you have been taking a whacking over these last couple of years because inflation has been so low, and interest rates have been so low. >> this wasn't necessarily a win-win policy. the savers were at the disadvantage. it really played to people who wanted to invest in the stock market. so if you didn't want to do that. if you just wanted a rate of return based on an interest rate, you really lost out from the stock market boom. and i think that's why there has been some distrust in middle america against ned because they

have seen some of their savings have eroded, and they ultimately did pay a tax. >> is there any reason to think change is on the way? >> there is a taper. so there is a reduction in the bond-buying program. but ben bernanke gave guidance that they are going to continue near zoro funds policy through 2014. and it would be very difficult for the fed to retreat on that promise now. >> so two more years of low interest rates. >> yes, if you are buying a house or car that's good news, if you are a saver it's not much good news. >> we are focused on janet yellen appropriately her first day before congress. she is not the only person that decides interest rates. there is a vote. now it is possible that janet yellen is on the minority side

on some of those votes or was in the past. this can't all be put on yellen, and it couldn't be put on bernanke or before. this is a collective. >> and are there hawks and aboves in the federal policy making circle. >> yes, there are, and this fed is under transition, because i think it is four seats are changing. you have one seat about to be vacant and three nominees that have to be confirmed before the senate in the next month or so. so of the seven governors, for example, we're having pretty much half of it change. so we may see a vastly different fed some of which will certainly be because of yellen, but not all of which are because of yellen. >> we're going to take a short break, and when we come back, we'll take a look at the coming

here or two. we'll put you on the federal reserve bank. what will you be looking for? what decisions will have to be made and soon? this is "inside story."

>> welcome back to inside story. i'm ray suarez. on this edition of the program welcome back to "inside story." i'm ray suarez. on this edition of the program, we're talking about the federal reserve, under the leadership of janet yellen. the stock market liked what yellen said today. news that the house will vote on raising the debt ceiling won't hurt. still with us to discuss the still fragile economy are our guests. neil, janet yellen was pressed today on the possible effects of the affordable care act, on her understanding of why the labor

market participation rates are so low. where she saw inflation coming in the next year. there was a lot to handle, and she didn't want to predict the future, but there are some things she has to be watching closely, because she and her fellow governors have some decisions to make. what is in the pipeline? >> it's not the obamacare enrollment numbers. i think first and far most is the underemployment rate, the number of people who would like to work full-time is still far too high, participation levels are at 1978 levels right now, and even though that unemployment rate isment doing down, it may be coming down for reasons that are not good like people are giving up, or retiring prematurely. so all of these factors have to be taken into account as the fed decides by how much to taper every single meeting. >> peter there was a lot of back

and forth over the labor force participation rate and trying to figure out whether it was people who simply weren't working, or whether we are in the middle of a demographic change to where the baby boomers are aging, and there are going to be fewer people working. why is it so important to argue over that? >> because the participation rate is basically -- if you looked at last friday's employment data, you'll see for the first time we had more participa participants. the question is is it demographics, is it the baby boomers that are retiring, and of course you have less people looking for work? but i think the problem with the labor market stems from the fact

that there are -- that there are many jobs out there that have been lost that will never come back, that, you know, will -- that were replaced with new technology, and i think that -- that, you know, the feds really can't do very much about that, and so it's a -- it's a political question i think more than an economic question at this point. >> bartlett, are there competing interests here if you are a consumer, if you are on the verge of requirement, do you have a different set of druthers than what jamie dimon might want? >> yes. the fed with all of its monetary policy has winners and losers, when it raises rates, it is advantaging certain creditors

and also disadvantages certain users of credit. it's an important point, though, that also on janet yellen's plate is the completion of wall street reform. why we're in this economic rut is in no small part balk of bank practices that exploded just a few years ago, and the fed has yet to adopt or institute all of the rules.

>> you have to explain this to a specialist audience, would it be better if general consumers understood the workings of the fed? it's an independent agency, how much is it restrained by what the public wants or needs or knows or doesn't know. >> the fed has said it is data driven. but i wanted to also piggyback on a point that bartlett that the true legacy on janet yellen's first testimony -- the true legacy of janet yellen will

be in how she regulated dodd-frank. ultimately it was the financial system and the collapse thereof that affected the american people, the middle class, the homeowners, jobs that were lost as peter was saying -- >> and why dodd-frank was passed in the first place. >> right. so it is important that the american people understand what the fed is doing. the fed makes its own decisions independently as much as some in congress don't like that fact, the fed is an independent agency. >> good to talk to you all. that brings us to the end of this edition of "inside story." thanks for being with us at home. the program may be over, but the conversation continues. we want to hear what you think about the issues on this or any day's program. you can log on to our facebook page or send us your thoughts on twitter or reach me districtly at ray suarez news. see you for the next "inside

story." in washington, i'm ray suarez. ♪ welcome to al jazeera america, i'm del walters. these are the stories we are following for you. thousands of flights have been canceled already as another major winter storm slams the south. >> we're pretty confident that we will win the vote. a landmark labor vote taking place in tennessee. and casting doubts about mammograms, we'll hear from the lead author of a controversial new study. and the president using the pow o'er