Austan Goolsbee: evaluation

Transcript context

…Or someone. Right, that’s a system we have. Someone might ask, why does the Federal Reserve Bank of Dallas need as many research staff as it has? Then let’s back up to a little bit to how the Fed is created. It was made in 1913, so it’s a little bit kludgy, and like every politically created thing, it involves some compromises, but there are a couple of pieces, I think are genius, or at least very durable, important contributions about how the Fed is built that we should not lose. The first thing to note is, we have a hybrid federal system in which, yes, there is a chair, and there are seven governors that are political appointees named by the president and confirmed by the Senate. In 1913, as today, people were deeply uncomfortable with the idea that either Washington, DC, or New York City, or just a combination of those two, would control the US financial system with no input from the rest of the country. So, they didn’t set it up that way. They added 12 Reserve Banks from around the nation to be part of the FOMC, and we go and we sit around the table. There’re 19 people; 7 of them are political appointees, and 12 of the people sitting around the table are not political appointees. They’re chosen by boards of directors out in the flyover states like us, where business leaders, civic leaders, and people from the region choose to have representation. I think it’s critically important that we maintain that kind of monetary policy, independent thought, that it’s not just New York City and Washington, DC, that are coming with one perspective. You’ve probably seen some of the analyses over the years, a lot of the new ideas about monetary policy, about banking and supervision that came out of the Reserve Banks. That’s why we have our own research departments, and that’s why we take very seriously the idea that when we go to the FOMC meeting, I love hearing what the other presidents and the governors have to say. I said with no irony, “I consider the FOMC to be the world’s greatest deliberative body at this point.” No offense to the US Senate or to anyone else, it’s an amazing group. If you’re an econ nerd, you go into that room, and it is just about the coolest thing there is on this planet. The shades come down. There’s a giant table, and they go around the table and Jay Powell is going to say, “Here’s what I see in the economy.” And then it’s going to go to Chris Waller, and it’s going to go to President Barkin and President Bostic. “What do you think?” I think that’s really important. If we put ourselves on a path that we’re going to go chip away at that, and that somehow it would be more efficient to hammer away and get rid of the national representation on the FOMC, I think that’d be a terrible mistake. Now, I like the structure of the committee. I think that’s excellent. But if someone said to me, “Well, there should only be five Feds with a staff, but, say, you should have complete access to all of them. If macro was mainly about data rather than new theories” — and I agree with that — “five staffs should be enough.” It’s not like the old days where you needed the Minnesota School, monetarism in St. Louis.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.