The U.S. Federal Reserve Building in Washington, DC.
The U.S. Federal Reserve Building in Washington, DC. - 
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Janet Yellen was nominated this week to the Federal Reserve as chairwoman. And from a historical standpoint, Marketplace Money correspondent Chris Farrell says that's a big deal.

"She is a top-flight, top-ranked economist. She knows how the Federal Reserve Bank works, she knows how the White House works ," Farrell says. "Since 2010, she's been the Vice Chairwoman of the Fed, and I think it's a historic moment to recognize that if she gets approved, for the first time in the 100 year history of the Federal Reserve, a woman will head it. It's a big moment."

The Fed can seem disconnected from daily life, but the decisions made in Washington matter.

"For a normal person, the Federal Reserve is one of the most powerful economic institutions in the world," Farrell says. 

One of the biggest things the Federal Reserve controls is monetary supply and interest rates. "When the Federal Reserve tightens monetary policy, when the Federal Reserve decides it's time to start tapering from what it's been doing, interest rates tend to go up, and you would see that in higher mortgage rates," Farrell says. "So if your auto loan is going up, it's probably going up because the Federal Reserve is running a tighter monetary policy."

And if you've opened a mortgage lately because of low interest rates, Farrell says you have the Federal Reserve to thank. "The last couple years, [the Federal Reserve] is running a pretty loose monetary policy to try to support this economy." 

Marketplace Money listener Sandra asks Chris if she's too old to purchase a condo (she's 49 years old), or if she should continue to rent housing and investing in her retirement accounts.

"Age doesn't really matter. The housing market fluctuates. So it's [more about] how conservative can your finances be? How secure is your income? I think that's really the key issue here that so many people face," Farrell says. "There's nothing wrong with owning a home, there's nothing wrong with owning a condo. There's nothing wrong with renting. The question is over the next 5-10 years, how secure is your income?"

Sandra currently has $40,000 saved for retirement and has an additional $40,000, and Farrell cautions against tying up most of your money in a home. "They're expensive. You're going to want to maintain them," Farrell says. "That can add to your quality of life, but it also draws on those savings. And you may have other desires, other goals. If you rent, and then save, you might be able to pursue those things more than putting that money into the housing. These are the kind of issues I'd be weighing."

For more on questions like how to choose a professional beneficiary if your children are underage, and choosing between paying down debt and building an emergency fund, click on the audio player above. Have a question of your own? Let us know in our comments below or on Facebook