The Janet Yellen songbook

The new Fed chairman (pending Senate confirmation) is Brooklyn born, has an impressive stamp collection, and is married to George Akerlof, a Nobel-winning economist. Much will be made of Yellen becoming the first woman Fed chairman, as it should, but the real story is what a great selection this is - a remarkable pivot from what would have been a terrible selection in Larry Summers. Of course, now she's stuck with a fragile world economy that's been propped up by the Fed's bond-buying program that the markets have come to rely on. From the WSJ's David Wessel:

Mr. Bernanke wrote the first half of the new monetary-policy textbook. It's called: How to use monetary policy to prevent a Great Depression and avoid deflation after short-term interest rates hit zero. Ms. Yellen is in line to write the second half. It will be called: How to return monetary policy to something near normal without creating the next financial crisis as elected politicians make a mess out of tax and spending policy. This won't be easy.

Real-life economics: When she and her husband hired a baby sitter for their son, they paid more than the going wage in the belief that a happier baby sitter would provide better care. From a lengthy NYT profile:

The decision not only attracted a series of excellent sitters, it also inspired the couple, both professors at the University of California at Berkeley, to develop a new theory of the labor market that remains an influential justification for the Federal Reserve's ability to stimulate job growth. Employers, they asserted, often seek to improve morale by paying more than the minimum necessary wage, which has the effect of preventing some people from finding jobs. And during periods of high unemployment, they said, monetary stimulus can increase demand for labor - a direct rebuttal to the classical view, which left little role for the Fed in combating unemployment.

Been there, done that: From Slate's Matthew Yglesias:

She'll be the best-qualified Fed chair ever: Ben Bernanke had a stint as Council of Economic Advisors chairman and served a couple of years on the Fed Board of Governors before taking over. That at the time made him one of the most qualified and well-credentialed Fed chairs ever. But Yellen blows him away. She did the CEA gig too. And she was a governor for three years. But she was also president of the San Francisco Fed for five and a half years and has been vice chair for the past three years. It's a level of experience that's unprecedented in the history of the system.