BUILDING AN ECONOMY THAT WORKS FOR EVERYONE - … an economy that works for everyone - why you...
Transcript of BUILDING AN ECONOMY THAT WORKS FOR EVERYONE - … an economy that works for everyone - why you...
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BUILDING AN ECONOMY THAT WORKS FOR EVERYONE - WHY YOU SHOULD CARE ABOUT THE FEDERAL RESERVE Tuesday, June 9, 2015 * 1:00-2:00pm ET
The Webinar will Begin Shortly Sponsored by GIST
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Building an Economy that Works for Everyone - Why You Should Care About the Federal Reserve
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Webinar Overview • This webinar is being recorded.
• The audience will be on “listen only mode.”
• Use the “chat function” on your screen to ask a question.
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Use chat box to ask questions
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Building an Economy that Works for Everyone - Why You Should Care About the Federal Reserve
AGENDA Opening Remarks:
Presentation:
Q&A:
Alexander Berger, GiveWell
Jared Bernstein, Center on Budget and Policy Priorities
Ady Barkan, The Center for Popular Democracy
Jean Ross, Ford Foundation (Moderator)
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Alexander Berger, GiveWell
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Jared Bernstein, Center on Budget and Policy Priorities
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FED! (GOOD GOD, Y’ALL) WHAT IS IT GOOD FOR? Jared Bernstein CBPP
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Who needs the Fed? What it is and how it works… • The banking system is like the bloodstream…households
and businesses need to be able to save, borrow, and lend; fairly priced credit needs to flow through the economy’s veins.
• The Federal Reserve Bank sits atop the banking system to help avoid the “panics” that were endemic in the old days.
• The Fed has evolved over time to play more of a role in managing the macro (overall) economy.
• It does so mostly by raising and lowering the Federal Funds Rate, the rate at which banks lend to each other (the FFR is a “benchmark,” meaning other key interest rates are keyed off of it).
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Macro-management: the dual mandate • By statute, the Fed is supposed to achieve stable prices
and full employment. • These two goals are thought to be in opposition: if the Fed
pushes to hard on jobs and unemployment gets too low, the economy will “overheat” and prices will spike.
• Q: But is this true??!! A: Meh…not nearly as much as people think.
• Consider the recent past: falling unemployment and low inflation (note: the Fed’s inflation measure is different from yours).
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So, is the Fed good, bad, useful, or what? • Very helpful in the downturn (B&Z: lowered unemp by as
much as 2-3 percentage points) • Very helpful (in a way) in the latter 1990s • Political independence (more precisely, Congressional
independence) important and helpful • But full employment has been the exception over the last
35 years • The class bias in the unemployment/inflation tradeoff
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Current events; asymmetric risk • Why all this stuff about raising rates?
• The risk of underheating
is greater than the risk of overheating.
• So why raise? --pressure from outside --ZLB risk --kinda seems like that time…
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Macro-prudential oversight, or Fin Reg • Really important in terms of breaking the “shampoo
cycle.”
• Greenspan/Bernanke: Can’t spot or stop bubbles • Chair Yellen: Sorry guys…we don’t have that luxury
• “Systemic risk” police
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Ady Barkan, The Center for Popular Democracy
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Ok, so the Fed matters.
What are we doing about it?
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Step One: Popular Education, Base-Building,
and Coalition Building
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Step Two: Making a Splash in Jackson Hole
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Esther George, Kansas City Fed President
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“Welcoming” the bankers
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Fed Chair Janet Yellen
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Stanley Fischer: the second most powerful Fed official
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The press loved our story
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Step Three: Meeting with Janet Yellen and
the Board of Governors
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A big win The Fed sets up a Community Advisory Council with a “particular focus on the concerns of low- and moderate-income populations.”
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Step Four: Engagement with the Regional
Presidents
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March 5 Day of Action
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We’ve met with Fed Presidents: Kansas City
Boston San Francisco (July 13)
And high ranking staffers: Dallas
Philadelphia Minneapolis
St. Louis
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But there’s much more work to be done
• Targeting higher wages and moving off of the 2% inflation ceiling
• Democraticizing the process for appointing regional presidents in early 2016
• Getting real community representatives onto the regional boards of directors
• Getting the Fed to think more boldly about how to create an economy that works for all!
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Q & A Use the “chat function” on your screen to ask a question.