Janet Yellen and the Politicization of the U.S. Treasury

Part 1 - How the U.S. Treasury Was Politicized in the Modern Era

Janet Yellen didn’t just misread the economy—she helped rewire the Treasury into a political instrument, neutral language but driven by progressive ideology. This series tracks how that shift happened, what it unleashed, and why the next era of American finance will be shaped not by economists, but by narrative-savvy power players.

The Era of the Political Technocrat

Janet Yellen didn’t storm the gates of Washington. There was no dramatic entrance from a major bank, no wave of wealth or Wall Street bravado. She came through the side door—credentialed and nonthreatening. She wasn’t there to shake things up. She was there to stabilize. And that’s exactly what made her dangerous. Beneath the calm exterior was deep, unshakable ideology.

Her appointment to Treasury wasn’t just a personnel decision. It marked the full merger of technocracy and ideology. Treasury—once a conservative institution in the lowercase sense: restrained, cautious, allergic to fashion—became an engine of progressive economic goals, dressed up as expert consensus. Stimulus as salvation. Redistribution as stability. Global taxation as inevitability.

The shift happened because people like her made it look reasonable. Inflation wasn’t her fault, they said—it was complicated. The debt didn’t matter, they argued—the models said so. But the results were predictable: politicized institutions, inflationary pressure, and a Treasury that now openly picks sides.

What follows is a diagnosis. It tracks how Yellen rose, how she was elevated by a culture desperate for expert approval of its political instincts, and how her tenure quietly rewired the Treasury Department into something it was never meant to be.

And in the parts ahead, I ask the question few in Washington will: what happens when financial power leaves the realm of prudence and enters the realm of influence? What fills that vacuum?

Academic Keynesianism, Berkeley, and the Problems from California

Yellen was not made in Washington. She was made in lecture halls, faculty lounges, and the quieter precincts of mid-century technocracy. Her training was old-school Keynesian—born in the postwar glow when central planning still held a kind of respectable allure, and the government’s role in managing demand was taken as gospel.

That early formation matters. Because Yellen’s worldview never really changed. She believed in the ability of the state to smooth the cycles, protect the worker, and gently push the economy toward more “just” outcomes. It was technocracy, yes—but with an unspoken ethical tilt. She would never call it ideology. But it was 100%.

She landed at UC Berkeley in 1980. And there, her instincts were not challenged—they were reinforced. Berkeley, even then, was an incubator for left-liberal orthodoxy: social justice in the humanities, Keynesianism in the econ department. The idea that capitalism had to be “managed,” that inequality was structural, and that government had a central role in correcting market outcomes was the baseline—not the debate.

Yellen thrived in that environment. She wasn’t an agitator, and she wasn’t a political figure—at least not yet. But she stood for the idea that policy should serve labor, not capital (deep sigh). That the job of the economist was to direct markets, not defer to them.

She brought that mindset to her early roles in Washington. Under Clinton, she served on the Council of Economic Advisers—an early voice behind the administration’s modest welfare-to-work reforms and its emphasis on low unemployment as the driver of equity. But even then, the role of the economist was being softened into something more moral, more therapeutic. The data was still there. But so was the messaging. Good policy had to sound compassionate. Yellen understood that.

Still, her real rise didn’t begin until the 2000s, when she was appointed President of the San Francisco Federal Reserve. There, she began the long arc from economist to institution. She was cautious, dovish, and unusually attuned to the labor market—traits that earned her credibility in Democratic circles but suspicion from the hawks. By the time she became Fed Chair under Obama, she was being packaged as historic: the first woman, the most labor-conscious, the soft voice of equity in a field still accused of “market fundamentalism.”

The image stuck. But it was incomplete.

What few seemed to notice—or admit—was that Yellen wasn’t just an economist. She was a political product of her time. She had absorbed the cultural assumptions of Berkeley, and the coastal left. She believed the role of government was to intervene. She viewed inequality as something to be corrected from above. And she saw no real conflict between her data and her politics—because in her world, the politics were already settled.

She was, after all, a product of the post–World War II Open Society era—and she helped hammer in the final nail that would drive a large segment of the country toward Trumpism.

The media never asked what kind of economist she really was. They were too busy praising her tone. And by the time she took the reins at the Treasury in 2021, few bothered to question whether someone so deeply shaped by academia, so obviously aligned with one party’s worldview, could lead an institution that was supposed to stand above politics.

The answer, as we’ll see, is no.

Yellen was many things. But apolitical? Never.