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tv   Economic Club of New York Discussion With Federal Reserve Chair Jerome...  CSPAN  February 16, 2021 10:01am-11:04am EST

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. at one point they said if you smoked cigarettes they would give you a shot. they straightened that out because they got overwhelmed with people. they had problems with getting the second shot because they used up too many of the first shots. they've pretty much got it under control now. they still haven't got to all the nursing homes and stuff. i'm not happy about that. i think they should be giving nursing home shots first and foremost above anybody. host: i hope your wife gets vaccinated as well. thanks for your calls. we will be back here tomorrow morning as well. have a good day.
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♪ >> you're watching c-span. your unfiltered view of government. c-span was created by america's cable television companies. today we are brought to buy these television companies who provide c-span as a public service. this morning, u.s. election assistance commission chair benjamin hoglund testifies on the election administration issues at a house appropriations subcommittee hearing. watch live on c-span or listen with the free c-span radio app.
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the 117th congress includes over 60 new members and this diverse group includes first-generation immigrants, state representatives and former college and professional athletes. watch our conversation with new members of congress all this week. tonight we feature freshman menu -- members with backgrounds in progressive activism. watch interviews with new members of congress tonight at 8:00 eastern on c-span. online at or listen on the free c-span radio app. >> federal reserve chairman jerome powell discusses monetary policy and the pandemic at an event hosted by the economic club of new york. this is about an hour. >> and i'm john williams. and i'm honored to be here with all of you today. the economic club of new york is the nation's leading nonpartisan
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forum for discussions on economic, social and political issues. our mission is as important today as ever as we continue to bring people together as a catalyst for conversation and innovation. if i could take a moment to recognize the 324 members of our centennial society as their contributions continue to be the background -- backbone of support for the club and offer support for our wonderful and diverse programming now and in the future. a select group of rising gender business thought leaders, we would also like to welcome graduate students from rutgers university, nyu stern school of business, columbia business school and the school of business at fordham university. it's a great pleasure to welcome back my colleague and esteemed guest of honor, jay powell. chair of the federal reserve.
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he also serves as chair of the federal open market committee. he served as member of the board of governors after taking office on may 5. prior to his appointment to the federal reserve board, he was a visiting scholar of the bipartisan policy center in washington, d.c.. and he was part of the carlyle group. before that, he served as an assistant secretary and undersecretary of the treasury under president and george h w bush. prior to joining that administration, he worked as a lawyer and investment banker in new york city. in addition to his service on corporate boards, he served on the boards of charitable and education the tuitions including the nature conservancy of washington, d.c. and maryland and he has received his
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undergraduate degree in politics from princeton university and earn his law degree from georgetown university. following chair powell's address, we will have a q&a session with distinguished questioners from the club. this conversation is on the record as we have media on the line. the virtual floor is yours. >> thank you and good afternoon everyone. today i will discuss the state of our labor market from the recent past to the present and then over the longer term. a strong labor market that is sustained for an extended period can deliver substantial economic and social benefits including higher employment and income levels, improved and expanded job opportunities, narrower economic disparities and healing of the entrance -- entrenched damage inflicted by past recessions at present, we are a
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long way from such a labor market. fully realizing the benefits of a strong labor market will take a continued support from both near-term policy and long-running investments so that all those seeking jobs have the skills and opportunities that will enable them to contribute to and share in the benefits of prosperity. we need only look to february of last year to see how beneficial a strong labor market can be. the overall unemployment rate was 3.5%. the lowest in a half-century. the unemployment rate for african americans reached historical lows. prime age labor force participation was the highest in over a decade. a high proportions of health -- households saw jobs as plentiful. overall wage growth was moderate but wages were rising rapidly for earners on the lower end of the scale. these encouraging statistics were reaffirmed and given voice
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by those we met and conferred with including the community labor and business leaders, retirees, students and others. we met with during the events we conducted in 2019. many of these gains had emerged only in the later years of the expansion. the labor force participation rate had been steadily declining from 2008 to 2015 even as the recovery from the global financial crisis unfolded. in 2015, prime age labor force participation, which i focus on because it is not significantly affected by the aging of the population, reached its lowest level in 30 years even as the on employment rate declined to a relatively low 5%. also concerning was that much of the decline and participation up to that point had been concentrated in the population without a college degree. at that time, many forecasters worried that globalization and
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technological change might have permanently reduced job opportunities for these individuals and that as a result there might be limited scope for participation to recover. fortunately the participation rate after 2015 consistently outperformed expectations and by the beginning of 2020 the prime age participation rate had fully reversed its decline from the 2008 to 2015 period. moreover, gains and participation were concentrated among people without a college degree. even that u.s. labor force participation has lagged relative to other advanced economy nations, this progress was especially welcome. we also saw a faster wage growth for low earners once the labor market had strengthened sufficiently. nearly six years into the recovery, wage growth for the lowest earning quartile had been persistently modest and well below the pace enjoyed by other workers.
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at the tipping point of 2015, as the labor market continued to strengthen, the trend reversed with wage growth consistently and significantly exceeding that of other workers. at the end of 2015, the black unemployment rate was still quite elevated at 9%. despite the relatively low overall unemployment rate. that disparity began to shrink as the expansion continued beyond 2015, black unemployment reached a historic low of 5.2% and the cap was the narrowest since 1972 when data unemployment -- on employment by race started to be collected. black unemployment has tended to rise but also fall more quickly in expansions. these persistent disparities can declined significantly. but without policies to address
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their underlying causes, they may increase again when the economy ultimately turns down. these latebreaking improvements in the labor market did not result in unwanted upward pressures on inflation as might have been expected. in fact, inflation did not even rise to 2% on a sustained basis. there was every reason to expect the labor market could have strengthened even further without causing a worrisome increase in inflation were it not for the onset of the pandemic. the state of our labor market today could hardly be more different. despite the surprising speed of the recovery early on, we are still very far from a strong labor market whose benefits are broadly shared. employment in january of this year was nearly 10 million below its february 2020 level. a greater shortfall than the worst of the great recession's aftermath.
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after rising to 14.8% in april of last year, the published unemployment rate has fallen relatively swiftly. but published unemployment rates during covid have genetically understated the deterioration in the labor market. must importantly the pandemic has led to the largest 12 month decline in labor force participation since at least 1948. fear of the virus and the disappearance of employment opportunities in the sectors most affected by it such as restaurants, hotels and entertainment venues have led many to withdraw from the workforce. at the same time, virtual schooling has forced many parents to leave the work was to provide all daycare for their children. all told, nearly 5 million people say the pandemic prevented them from looking for work in january. in addition, the bureau of labor statistics reports that many unemployed individuals have been mis-as unemployed.
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correcting this misclassification and counting those who have left the labor force since last february as unemployed would boost the unemployment rates -- rate to close to 10%. even those grim statistics understate the decline in labor market conditions for the most economically vulnerable americans. aggregate employment has declined 6.5% since last february but the decline for workers in the top quartile of wage distribution has been only 4% while the decline for the bottom quartile has been a staggering 17%. employment for these workers has changed little in recent months while employment for the higher wage groups has continued to improve. the employment rate for blacks and hispanics have risen significantly more than for whites since february 2020. as a result, economic disparities that were already too wide have widened further. in the past few months, improvement in labor market
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conditions stalled as the rate of infections sharply increased. jobs in the leisure and hospitality sector dropped over a half million in december and a further 61,000 in january. the recovery continues to depend on controlling the spread of the virus which will require mass vaccinations in addition to continued vigilance in social distancing and mask wearing in the meantime. since the onset of the pandemic, we have been concerned about its longer run effects on the labor market. extended period of unemployment can damage lives and livelihoods while also eroding the productive capacity of the economy. and we know that it can take many years to reverse the damage. the increase in unemployment at the start of the pandemic was almost entirely due to check -- temporary job losses. temporarily laid off workers tend to return to work much more click -- quickly.
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permanent job loss has increased as sectors of the economy continue to struggle. as of january, the level of permanent job loss as a fraction of the labor force was considerably smaller than during the great recession. research shows that the paycheck protection program has played an important role in limiting permanent layoffs and preserving small businesses. the renewal of this program this year is an encouraging development. of course in a healthy market place -- based economy, perpetual turn will always render some jobs obsolete. over time, workers and capital move from first to firm -- firm to firm and sector to sector. so how do we get from where we are today back to a strong labor
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market that benefits all americans and starts to heal the damage already done and what can we do to sustain those benefits over time? experience tells us that getting to and staying at full employment will not be easy. in the near term, policies that bring the pandemic to an end as soon as possible are paramount. workers in households who struggle to find their place in a post pandemic economy are likely to need continued support the same is true for small businesses that are likely to prosper again once the pandemic is behind us. also important is a patiently accommodative monetary policy. i describe several of those important lessons as well as our new policy framework at the jackson hole conference last year. i have already mentioned the broad based benefits that a strong labor market can deliver and noted that many of these
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benefits only arose toward the end of the previous expansion. these benefits were achieved with low inflation. inflation has been much lower and more stable over the past three decades than in earlier times. we have seen that the longer run potential growth rate of the economy appears to be lower than it once was in part because of population aging and that the neutral rate of interest is also much lower than before. hello neutral rate means that our policy rate will be constrained more often by the effective lower bound. that circumstance can lead to worse economic outcomes particularly for the most economically vulnerable americans. to take these economic developments into account, we made substantial revisions to our monetary policy framework as described in the fomc's statement on longer run goals and monetary policy strategy. this revised statement shares
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many features with its predecessor including our view that a longer run of 2% is most consistent with our mandate to produce maximum employment and price stability. it also has some innovations. the revised statement emphasizes that max employment is a broad and inclusive goal. recognizing the economy's ability to sustain a robust job market without causing an unwanted increase in inflation, the statement says that our policy decisions will be informed by our assessments of the shortfalls of employment from its maximum level rather than by deviations from its maximum level. this means that we will not tighten monetary policy solely in response to a strong labor market. to counter the adverse economic dynamics that could ensue from declines in inflation expectations in an environment
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where main policy tool is more frequently constrained, we now explicitly seek to achieve inflation that averages 2% over time. this mean that appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time in the service of keeping inflation expectations well anchored at our 2% longer run goal. our january postmeeting statement on monetary policy implements this new framework. we expect it will be appropriate to maintain the current accommodative target range of the federal funds rate until labor market conditions have reached levels consistent with maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time. we will continue to increase our holdings of treasury securities by $80 billion and $40 billion
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per month respectively until substantial further progress has been made toward a maximum employment and price stability goals. 75 years ago, the united states faced the challenge of re-employing millions amid a major restructuring of the economy toward peace time ends. part of congress's response was the employment act of 1946 which states that it is the continuing policy and responsibility of the government to use all practical means to promote maximum employment. this provision formed the basis of the employment side of the fed's dual mandate. my colleagues and i are strongly committed to doing all we can to promote this goal. given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the post-pandemic economy, achieving and sustaining maximum employment will require more than supportive monetary policy.
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it will require a societywide commitment with contributions from across government and the private sector. the potential benefits of investing in our nation's workforce mints. steady employment bestows a sense of purpose, improves mental health, increases lifespans and benefits workers and their families. i'm confident that with our collective efforts across the government and private sector, our nation will make sustained progress toward our goal of maximum unemployment. >> thank you for sharing your insights and service to our country. we've got superb questioners today from the club. we have the economic club in new york vice chair and dean emeritus of nyu's stern school of business, peter blair henry. and we have club board member
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and professor of economics at harvard university, greg mankiw. peter, you have the first question. >> thank you for a broad and very insightful set of remarks that really frames very well for us the importance of both returning to and staying at full employment and its role in driving broad based and inclusive prosperity. we've also mentioned the importance of health. so the question i would like to ask you, mr. chairman, the american recovery act is currently being debated inside and outside the halls of congress. one of the topics which has been under much discussion is the extent to which given that we are now below full employment and we have an output gap, given the numbers that are being debated presently in the american recovery act -- the
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increase in gdp we would see as a result of these fiscal measures, what do you and your colleagues see in terms of the size of the gap we currently have relative to the increase in gdp that would bring us closer to a full point level of output given the numbers that are being thrown around. how much space is there? >> i guess i need to start by saying the question of how much to spend and what to spend it on is really one for congress and the administration and there's a discussion going on right now about those precise questions and that's appropriate. but not really appropriate for me or the fed to try to get into that discussion. we have very important goals and congress asks us to achieve those goals at the other side of that is we should stick to -- a
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little bit. i'm reluctant to get into what is clearly a very active debate. i will say fiscal policy has been absolutely essential in this recovery. this was a very different kind of downturn. it wasn't that something was wrong with the internal workings of the economy, it was this really natural disaster hit and people's incomes in many cases were just extinguished really quickly. so it was about income replacement. it's also now about the stimulation of aggregate demand. it wasn't a demand shortfall or some kind alilance in the economy so fiscal policy really came through with the cares act and i would just say it is the essential tool for this situation and we of course will continue to support for as long as is needed with our tools. i guess i will also say that
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measures of potential out put, there's a wide range of estimates and it's hard to relate -- i talked about this at jackson hole a couple years ago. you want to be careful with relying too much on potential estimates of potential output or the neutral rate of interest. >> my question is related. in your remarks you point out the united states has not experienced significant problematic inflation for many years. all the monetary and fiscal stimulus being applied right now together with some supply chain disruptions from the pandemic, some observers fear that we might experience problematic inflation if the economy recovers. do you have any indicators of future inflation that you watch
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particularly closely or are you wanting to see actual inflation before the fed starts to worry about it? >> as you had imagined, we monitor a very large range of inflation indicators. both in inflation expectations, survey expectations or market-based break events and that sort of thing. also pce inflation is our chosen metric. but we do look at wages. it's half of our mandate so we have a very strong group of inflation economists hats one of our major focuses. i will just say i think the bigger picture still is that we've seen as i mentioned, three decades, a quarter century of lower and more stable inflation. we have seen the last decade
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cleared by large advanced economy nations struggling to reach their 2% inflation goal from below. so that i think is the broader setting. in addition the pandemic itself has produced lower inflation ratings driven at the beginning by collapsing demand for certain particular services. as we look forward, as the very low readings of march and april fallout of the 12 month window, we will see an increase in ratings. that's not going to mean very much. it won't be very large or persistent in all likelihood, it's just a function of those readings falling out. we may see a burst of spending as the economy opens. many are monitoring for that. if the economy reopens there's quite a lot of savings on
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people's balance sheet. you can see strong spending growth and there could be some upward pressure on prices. again, my expectation would be that that will be neither large nor sustained. we have had inflation dynamics in our economy for as i mentioned three decades which consist of a very flat phillips curve meaning a weak relationship between high resource utilization but also low persistence of inflation critically. if you go back to when you and i were in college, you had a steep phillips curve but also a situation where if inflation went up it would stay up because expectations were not anchored so people would expect inflation and it would go up. we have very low persistence and a very flat phillips curve. those things are not permanent. it will evolve over time. inflation dynamics will evolve
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but it's hard to make the case why they would evolve very suddenly in this current situation. you asked about actual inflation. if you look at our framework and our guidance, in major part we are looking at actual inflation. part of the reason for that is all during the long expansion, many of us including meat were writing down a return to 2% inflation and maybe a mild overshoot year after year and year after year, inflation fell short of that. so we have tied ourselves to realizing actual inflation example. that's the way our rate guidance works. so we are looking for actual inflation. the last thing i will say is of course if contrary to expectations inflation expectations were to move up in a tub -- troubling manner and if
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inflation were to be at troubling levels, we have the tools to address that and we will use them. >> you really talked about the central rule that helped played in precipitating this recession and the role -- role it's going to play in the recovery. as you think about all the data that you look at and the changing nature of this recession, are there specific health indicators that you are looking at as new indicators, leading indicators of where the economy is structurally in the recovery? >> yes, many people trying to learn as much as possible about pandemics and the spread of covid and we talked to a lot of
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experts, our staff are very plugged into outside experts and we all read a lot. i think it's just a very different kind of set of data that we are looking at. it's a very broad set of data. we saw the initial impact in march and april than the economy was largely shut down, set all kinds of records for decline in employment and economic activity. then we had a spike in the south and west in the summer and i think many of us were looking that and thinking that will leave a real mark on economic activity and it was much less than expected. and then the one in the fall, we expected a spike in the late fall and winter has been very large of course. once again, big parts of the economy have performed very well through that good jobs have continued to be created in goods
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manufacturing and many service areas. the places directly affected by covid are those that require people to gather together closely, travel, entertainment, leisure. the last thing is what we all love to do is read enough that we could actually look ahead and say we know when herd immunity is going to get here. the truth is the experts that we talk to will always say it depends. it's highly uncertain. so what we have an effect is a base case which is fairly positive and that is that we do reach herd immunity sometime in the middle of the year and the economy performs quite well in the second half of the year. our job is not to replace dr. fauci. it really is to understand the implications for the economy. in this particular case the risks seem to be to the downside from a slower or less successful
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rollout of vaccination or from the new strains so we monitor all of that. our view is that we need to guard against those downside risks and make sure that we don't move to modify our policy. in other words to even think about withdrawing policy support until we see that we are really there the pandemic. because there is just so much uncertainty. it's a case where typical risk management approach to monetary policy or you are managing to where the risks lie which are the downside. >> i agree with you that fiscal policy has been incredibly important and appropriately so it's been very active. as a result of active fiscal policy, the federal government debt is now reaching historic highs as a percentage of gdp. somewhat paradoxically, the budgetary cost of that service is not -- by historical
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standards. the question is might the impact of higher interest rates and the federal budget enter into the feds thinking about how quickly and how much to raise interest rates as the economy recovers? >> the answer that -- to that is clearly no. we are a long way from a situation where we would have to take into account the question of the federal government's ability to finance itself. we will continue to set our monetary stance to best achieve maximum employment and price stability. as a completely separate matter, the u.s. federal budget is not on a fiscally sustainable path. that is been the case for a long time and it is certainly the case now.
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that is different from saying the level of debt is unsustainable. it's clearly not. my own view is fiscal authorities will need to return to this question and the time to do that is not now when the economy is weak, when we have 10 million people unemployed. it's just not the right time to be focused on addressing those issues. that time is when the economy is strong, unemployment is low. that time will come. but i would say it is not now. >> chair powell, one of the things we've learned is that the fed has more tools at its disposal than the textbooks originally taught us. during the financial crisis as interest rates approached zero, people thought the fed was going to be out of ammunition and clearly the fed has shown that it's not out of ammunition. as you think about the growing disparities in the labor market,
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certainly returning to full employment and the strategy you have outlined for allowing the economy to run at full employment is one way of addressing those disparities. is there thinking within the fed about tools that are clearly within your mandate that are more creative that will help you think about ways in which to more directly address these disparities other than the blunt instrument of the federal funds rate. >> we are an unusual organization because we have a very specific mandate and very powerful tools. and we have this grant of independence meaning that under current law, our decisions can't be reversed and we have long terms and they are not synchronized with election cycles or anything like that.
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and in a healthy functioning democracy that should be rare. most things should be subjected to regular popular democracy. and because of our unusual nature of course we work really hard to be transparent and find accountability and therefore democratic legitimacy -- legitimacy. given our precious independence which allows us to do things without regard to politics and without regard to political cycles, people generally understand that that's a good thing. that's an institutional arrangement that has served the public well. the other side of that is we do not seek to venture into what is effectively fiscal policy. you are talking about targeting groups who are very needy, very worthy, targeting them with resources, that's fiscal policy. that's what you are elected to do.
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nobody elected us. i feel like it's very important that we stick to our assignment from congress. maximum employment, price stability. we are also involved in the payment system and other things. the tools you described really are tools of fiscal policy specifically. we do not seek them. we should stick with what we are doing and let the fiscal authorities do what they do. >> i asked -- it's very important for people to understand the distinction between what the fed does and what other people might like the fed to do. >> very important. i agree. >> something can have different degrees and everyone is in favor of transparency, but some people take transparency to a very far extreme. i think of radel leo's firm.
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i presume you wouldn't -- ray dalia firm. whether the transparency has gone too far in some cases. do you think in some dimension we've gone too far in requiring transparency in requiring private conversations? >> there are some aspects of the transparency scheme broadly that if i had a blank sheet of paper i wouldn't do them that way. you mentioned we only have a certain number of governors. so that's not great and we got a waiver of that during the acute phase of the crisis. we got a legal waiver in the first cares act. i do think that is challenging.
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for the six governors to have lunch together we have to be super careful. i will say that by and large, i think the transparency that the move to far greater transparency really over the last almost 30 years now has really serve the public well and is appropriate in our system of government. we are so transparent now and we keep finding new ways to be transparent and i think it works. we are very focused on engaging with those who have oversight over us in our form of government and that's the legislature. here that's who has oversight. we are up there a lot, that's more transparency. more press conferences, more reports. it generally has been a very successful program. that's not to say that there aren't a couple of things that i
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would in the dark of night or otherwise be willing to change. >> i would like to talk about the global economy. every central bank has its particular mandate and is of course focused on doing the best to fulfill that mandate for its domestic economy. central banks are also in constant communication with one another to make sure that we are doing things in a way that doesn't undermined global prosperity. could you talk a bit about anything you can share with us about how you are thinking about global policy coordination and how challenging is that even that you are not seeing your colleagues in person? >> until i became chair i didn't realize how much time is invested in developing those
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relationships and being in regular communication with other central bankers and policymakers around the world. it's very important and you saw as the covid event really demonstrated, these developments often have global implications. so the channels that we developed during more peaceful times become very very important. we go to basel six times a year for maybe three or four days and there are a lot of one-on-one smaller meetings and then there are group meetings and it's just extremely useful to hear from other central bankers what really is happening, what really are there concerns. it does inform our understanding of what may happen without economy and it really puts in a situation where when things go wrong, we know each other and we can talk on the phone, which we did a lot.
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so we are still having all those calls. they are all calls now, they are not meetings. he sort of have a stored up amount of goodwill and knowledge of each other. it is still effective, but it's not the same. the difference is you can have the meetings on the telephone, but you won't have the time having lunch and just seeing each other in the halls and that kind of thing for three days. it's a very important aspect and i think the activities really do help us do our jobs better in serving the american public. >> after the great recession and the pandemic recession, the fed balance sheet is very different, much larger than it was 15 years ago. i know this is not the time to shrink it, but to look past the
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current crisis, the fed going back to a smaller balance sheet, do you think we are in a new world where this expanded balance sheet is a permanent fixture of the financial system? >> i want to begin by going with your first point which is the economy is far away from maximum employment and stable prices and the balance sheet will be the size it needs to be and buying assets is currently a key part of what we are doing in providing accommodation to the economy. that is our focus. we are not keen about shrinking the balance sheet just to be clear. in the long run, our balance sheet will be no larger than it needs to be to meet the demand for our liabilities and allow us to implement monetary policy
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effectively and efficiently. so in the long run it is demand for our liabilities, the biggest of which currency and reserves. when we buy assets, when the pool of assets declines over many years as it did after the global financial crisis, it really is the public's demand for our liability. so we will return to a place gradually with tons of transparency and not beginning any time soon to a place where the size of our balance sheet is set by the public's demand for our liabilities. it won't be the $20 billion balance sheet that we had in 2005. that is partly just that demand for currency has been surprisingly high at a time when in many other parts of the world people are declining to use currency. demand for reserves, reserves are the most liquid asset and
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they are in high demand for banks to meet their liquidity requirements and utilities and all that. so we will get back to that. we did ultimately do that with the global financial crisis. as the economy grows, the balance sheet shrinks as a percent of gdp. reserves decline as currency and other liability sort of organically grows. these are longer-term. so the answer to your question is yes with a long explanation. >> a point that you briefly alluded to in your remarks today and mentioned a bit more a couple years ago in jackson hole about the rate of interest. we are a long way away from full employment. as you think about longer-term
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and where the natural rate of interest is, the underlying rate of return on capital in the economy. one of the things that has been puzzling is why we haven't had much of an investment recovery as he would have had in the past given these levels of interest rates. of his leaders a pandemic, there's the financial crisis. just wondering whether you and your colleagues have thought a bit more about the long-term outlook for real investment. and what role that will play in particular as you think about these labor market issues. >> in the last part of the recovery, in the last few months we have seen a nice balance in investment. equipment and intangibles and of course residential. not so much in structures. but you have seen a strong
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balance in investment which is nice, it's important in driving productivity over time. there is as you know school of thought that the requirements for investment will be less and that's one of the reasons why the rate is so low. your bouncing savings and investment and the extent investment is low that the rate on savings is going to have to be lower. so that's a longer-term question and a very good one. as the things we are investing in way less and technology fences, it does have implications for lower and lower interest rates and i think we are experiencing some of that now. >> over the past dozen years or so, the fed and the treasury have worked very closely
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together to support the economy. now we have a treasury secretary a former fed chair, which is an unusual circumstance. do you think this is going to mean we are going to have continued collaboration than we've had historically? are there any risks that collaboration could threaten fed independence? or maybe the fact that the former fed chair -- if there's any political pressure. so wondering how you think about the fed treasury relationship in this current environment. >> i would start with the fact that these are longtime institutional relationships. we have different authorities in different roles. institutionally there is great respect for those differences on both sides. in addition, it's the case that
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finance ministries and central bank have ongoing communication and in some cases collaboration, in particular circumstances around the world on an ongoing basis. it hasn't at all amounted to any kind of a threat to fed independence. it becomes much more important during times of crisis. in particular, in the global financial crisis the fed used our emergency 13 three lending authority to very successful effect and then dodd frank in the aftermath changed the law so that any facility started under that emergency lending authority . i think that's good government. that's basically putting the elected branch of the government in a position of accountability. in any case, it's the law. we worked very successfully
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under that new legal structure. as long as those powers are reserved for unusual circumstances like that, i don't really see affect -- a threat to fed independence. basically the idea that a central bank needs a degree of independence from the political process, from election cycles is very well understood and widely agreed to on both sides of the aisle. it's rare to find someone who doesn't actually get that. this doesn't mean the fed won't come under a lot of criticism during difficult economic times. ultimately i think it's an institutional arrangement that has served the public well and i think that's well understood and i expect that will continue to be the case in the current administration. >> one of the night things about these events is we get questions from members ahead of time.
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we have a number of students in the audience. one of members asked, you have this incredibly distinguished career. you had it chance to see lots of different kind of people, policymakers, business people. my son, says the member is in college studying business and economics. what advice do you have for a young person studying business and economics who wants to be an economist in the future? >> interesting question. i would say this. i can only speak from my own experience. that is i wanted to have a career, i grew up in washington, d.c. and my family was not at all connected to the big political donors or anything like that. but that was happening around us. i wanted to have a mostly
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private sector career that i wanted to serve in the government and serve the public at different intervals and frankly the people that i thought 04 george schultz who just passed away at age 100 & was man's who is another one who was a lawyer in new york, he was secretary of state. i thought that was a great career model. by some amazing quote, that's kind of what happened for me. i would just say the united states system is very unusual in that it welcomes people from the private sector openly to come in and serve and then go back and go back to their lives. in most parliamentary democracies, you either have a career in public service which is great, there are great public servants. but you don't have so many cases of people wanting to come in in and serve for three or four years. i think that at the perspective
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and keeps the government more grounded in what's going on out there. of course i would think that. that's the advice is don't just consider the advancement of your own career but consider how you can also do public service that's one thing i would certainly. the second thing is think big. looking back at the 45 plus years since i graduated from college, the opportunities, the things that were happening, people are walking by me on the princeton campus, meg whitman, jeff bezos. they thought big. those were people there after i was. think big. big things are possible. >> good advice. >> that question motivates my next one. that's imagine that your next job is not fed chair but as a member of congress?
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is there a particular issue, big problems out there that we aren't addressing the nation, really high priorities that we should be focused on? and i want to transcend the current pandemic. we all agree hitting people healthy again is job one. let's put ourselves ahead six months. what are some of the big challenges as a nation you think our leaders broadly speaking should be focused on? >> i think there are a lot of them. one that connects more to our work here as this is also in my speech, it would be great if we had a national strategy to have the u.s., to make the u.s. economy is big and the
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prosperity that the united states economy has to be as big as it can possibly be. part of that is investing in the labor force. part of it is having a tax code and regulatory policy that promotes growth. growth is what enables incomes to rise generation upon generation. so we want growth to be high, we also want it to be widespread. people come to washington and work on all these hot political issues. we don't take a step back and say what is the supply-side -- and also the distribution of that. the more broadly inclusive prosperity. so those are the things i would really want to work on if i were an elected representative. some of the things. >> may think it's really interesting, your point on
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productivity. as you get the chance to observe lots and lots of data about the various things that are driving productivity or not as the case may be, are there things that stand out in your mind has either for you particularly or your colleagues more generally their bottlenecks to achieving that kind of productivity growth that we need to decide -- have sustained prosperity? >> we have a much smaller program for basic research in the federal government. a lot of the basic research we were doing and wartime and during the space programs actually benefited the country a lot. i'm a believer in the fairly well-known model of the technological change model. two of greg's colleagues at harvard wrote the book, the race
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between education and technology. i think there's a lot in that. what evolving technology wants his people with skills and aptitudes to benefit from it. if those people are there then you can have a rising tide that lifts all boats. you can have rapid technology actually declining in quality. u.s. development plateaued relative to our peers and that explains lower growth. because you have people who really haven't had much in the way of real wage increases since i graduated from colleagues 45 years ago. you have others whose place in the income spectrum at the high-end has gone up by 500%. that is one of the basic explanations. our education system has not kept up with the needs of a technologically advancing economy. and if it does that, you can
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have more prosperity or broadly shared. >> one last question before i turn it back over to john williams. is your job fun? >> yes. it is. i love my job. it's a chance to do work that i think helps people, i have great colleagues. the subject matter is endlessly interesting and important. i really do enjoy the work. >> thank you, chairman powell. >> thanks john, fred, peter. -- greg, peter. >> i really liked the last question. and thanks peter and greg. i love the fact that we get questions from the students. i know you have invited your
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students to watch this event. i think this has been a great classroompowell, you view the ey economy, the fed, other important topics, so thanks to you for participating. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] [captions copyright national cable satellite corp. 2021] >> c-span is live for the election testimony of benjamin haviland -- benjamin hovland. the hearing is being held as the eac recently approved guidelines for overhauling voter equipment standards in addition to the auditing of election results. the hearing expected to begin shortly.
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just waiting for the house appropriations subcommittee to being there hearing with u.s. election assistance commission chair benjamin hovland as the eac approved guidelines to overall voting standards -- to overhaul voting standards, boosting security. the hearing is expected to start shortly. [no audio]
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