Of the monetary conference. Cspan2 the new monetary framework, and average inflation targeting. The idea was to make up for shortfalls by temporarily allowing inflation to exceed 2 while averaging 2 in the longer run. Yet, no specific time frame was given. This flexibility increases uncertainty about the feds commitment to price stability. Until recently the feds mantra in setting its policy rate was lower for longer. And the Forward Guidance was often misguided and the macros were unreliable and forecasting errors eroded confidence in policy making. The fed initially saw inflation to transitory and slow to increase the rate, however, the consensus has changed and fed made it clear at that rates will rise until inflation falls to a more normal level even if the u. S. Faces recession. Of course, the underlying problem with our current monetary regime is too much is expected from policy makers. The limits of money policy are often forgotten, moreover theres no clear rule for guiding policy. And pointing to the importance of rules in the conduct to Monetary Policy. Given the complexity of the real economy and the knowledge problem, according to brunner, we suffer neither under total ignorance nor do we enjoy, and the rules based regime emerges under the circumstances as the safest strategy. It does not assure us that economic fluctuations will be avoided, but it will assure us that Monetary Policy does not impose additional uncertainties on the marketplace. With this large staff of economists and access to massive amounts of data, and missed forecasting the 2008 financial crisis and missed warning signs of the current inflation. At a forum hosted by ecb in june, fed chairman Jerome Powell stated, quote, we now understand better how little we understand about inflation, closed quote. I hope todays conference will help shed light on the causes of inflation and provide positive lessons for improving Monetary Policy. Before moving to the bowen, jr. And duval Bowen Family Foundation for supporting tolds event. Id like to thank catos excellent staff helping with the conference especially nick anthony and kiona graham and casey and jonathan fields. Thanks to all of our speakers and moderators for taking time from your busy schedules to join us. Lets begin with fed chairman jay powell and the cato institute. Thanks and good morning, jim said im peter getler, my honor to be president of the cato institute. Congratulations to you, jim, cato has been an important voice for over four decades and lots of people contributed to that, no one has contributed more to this than our colleague, jim dorn. Jim inaugurated our monetary conference and under his leadership, its become an annual institution. Jim presided over each of the conferences including todays which as we pointed out was our 40th. Following the services to cato and our mission, and created and edited our cato journal. Jim will be retiring later this month and assume the title of senior fellow emeritus at the institute and our heart felt thanks for one of the longest tenure in cato history and enjoy you a fruitful and enjoyable retirement. And i know youll continue to be heard in the policy debate and world and i hope you enjoy your wonderful family. Lets turn to the annual monetary conference. Its my honor to welcome Jerome Powell to the conference along with ben bernanke the third board of governors to address the conference. Jerome powell was appointed in 2018 and reappointed this past spring and hes no stranger to the fed. And prior to serving the board of governors just over 10 years ago. And the one certainty that seems to come with the position of fed chair is that one will invariably face a time of great challenge. Paul voelker confronted our last and worst bout of inflation. Alan greenspan saw the stock market crash two months after confirmation and ben bernanke with the crisis of 2007 and 2008. And chairman powell, as we all know, served throughout the covid19 pandemic and aftermath, a period in which we saw the inflation reach the highest level in 40 years. As we sat in front of zoom screens for the past two and a half years, many of us watched as our hair turned grayer and few of us have an excuse for this as chairman powell. Were delighted to have key policy issues and what hes learned and the challenges now facing the fed. Chairman powell, good to see you, welcome. Thank you very much, peter. And thank you to go ahead. I dont think its a failure of imagination on my part nor do i believe that anyone will be surprised the first topic that we turn to inflation. You know, as jim mentioned, it seems policy makers were given, including at the fed were initially given a bit of a head fake on inflation and we heard policy makers describe increase for the related supply disruptions and while its undoubtedly seen as much stronger consensus now and larger part policy, and would you discuss insight into how your thinking evolved on it topic over the last year and a half and how those conclusions may have evolved as well . So, peter, thank you, and jim, thank you and congratulations to both of you and to cato on 40 years of great Monetary Policy conferences. I think a good entry point for that question, peter is to start by recalling that before the pandemic, unemployment was at a 50year low, inflation was low and stable and the economy was growing stable im sorry, steadily with no balances threatening expansion. None of this high inflation we see around the world now would have happened without the pandemic. The pandemic severely disrupted the economy, gave rise to risks of much more dire economic consequences thatten actually transpired, really, thanks in part to the policy response. So to start with policy, theres no question that policy certainly supported Strong Demand, but in my view, you would not have seen anything like the inflation that weve seen without the pandemic effects. And those pandemic effects include shifts in demand and also, playing a role in, not solely causing, but playing a role in the supply side constraints that emerged. So after the pandemic, it did lead directly to an extraordinary shift in demand away from inperson services and to goods and that shift, of course, was a major contributor to inflation in goods prices which is the main inflation story at the beginning when inflation broke out suddenly in march of 2021. Its worth remembering that declined in the pandemic and suddenly rose up in march of 21. The pandemic contributed to con strain supply in a number of important ways, including a large and persistent reduction in the size of the labor force, which contributed to extremely tight labor Market Conditions and upward pressure on wages, also the turmoil in Global Supply chains was probably caused by, to some extent by pandemic related shutdowns and Strong Demand and particularly goods demand. I think that cars are a good example. Yes, people had money and rates were low and demand for cars was strong, but also, the pandemic shifted demand upward for cars because some people wanted to avoid public transportation. That amped up new demand, demand for new and used cars and also the shortage of semiconductors for cars emerged from pandemic related demand shift as well. So, you know, the bottom line for me is that theres really a role for both here, and the two were tangled up in a way that its really not easy to disentangle. The you know, those of us who grew up in the 70s, i think that the danger, you know, exaggerated, in september of 1979 the first testimony a month after he was confirmed, Paul Volk Voelker understood the damage and bring it down even if it caused costs in other economic ways. One of the episode the greater the inflation slips the leash, the higher costs and damage necessary to bring it under control. I wonder whether we have the resolve to bring inflation under control today to face the potential economic costs. I took comfort from your recent remarks in jackson hole which seems the attempt to signal that resolve. I remain concerned that the intense political pressure that might be brought to bear for collateral economic damage before its won. And i wonder if you could help me sleep better on that. Sure, so i think its going back and remembering, and i pointed this out in my remarks two weeks ago at jackson hole, 10 days ago, that what paul voelker did and the fred did fed did, what happened over the course of the long period of great inflation, the public had come to think of our inflation as the norm, and to expect it to continue and thats what made it so hard to get inflation down in that case. So, its very much our view and my view that we need to act now, forthrightly, and strongly and keep at it until the job is done to avoid that. We think we can avoid the high social costs that paul voelker and the fed had to bring into play in order to get inflation back down and set us up for a long period of price stability. You know, that speech the point really there was to deliver a speech that was narrowly focused on inflation, more direct, and a lot shorter than a typical jackson hole speech and i thought that what was appropriate was a very, you know, kind of concise and focused message to your question, the message really was that the fed has and accepts responsibility for price stability by which we mean 2 inflation over time and again to your question, the longer inflation remains well above target the greaters risk that the public sees higher inflation as the norman has the capacity of rising the cost of getting inflation down so finally history cautions strongly against prematurely loosening policy. I can assure that my colleagues and i are strongly committed to this project, and we will keep at it until the job is done. He can also assure you that we never take into consideration external political considerations, you know. We are accountable to the public through congress, thats a very fundamental and important as expect of our work, but we do not we focus solely on the goals that congress has given us and thats what were going to do here. I think that, you know, thats really important because its clear that we could see, you know, political pressure coming to avoid economic costs when there could be claims from political players that, you know, inflation is back in the box long, long before it is. Jim mentioned in his opening remarks that two years ago, you moved to a new framework, flexible average inflation targeting and im bringing this up now, because, again reiterating the point trying to sleep better at night. By many accounts this move has created some more uncertainty in the market as mentioned and coming at a time when inflation now increased markedly and in spite of your statement of price stability has become less strong. Should you consider modifications to the framework, the way and better advantage shortterm expectations . So the framework, we began the work on the new framework in 2018 and we announced the results in august of 2020. And it really followed 25 years basically of global disinflationary forces and the problem was that Monetary Policy rates were closed to the effective lower bound much, too much of the time, much too close and even during good times so that meant that Central Banks were having a hard time all over the world, you know, finding ways to support the economy as needed and central bank and performance. So, thats why we did that. But the changes that we made were sort of very mainstream part of a literature around makeup strategies, but really, the point of our framework change the point of all of them was to and we said this clearly, was to have Inflation Expectations well anchored at 2 . The average inflation targeting, idea, was meant to support having Inflation Expectations, thats the goal at 2 and the reason is that we believe that the publics expectations of future inflation will play an Important Role in the actual path of inflation. So, thats kind of the fundamental basis of our framework and you know, as i just discussed, it is very important that Inflation Expectations remain anchored. I think the evidence today is that if you look at longer term expectations by households, businesses and forecasters and also markets, youll see that theyre pretty well anchored around 2 . Of course, shortterm expectations are higher because of high current inflation and also the clock is ticking as i mentioned. The longer that inflation remains well above target, the greater concern that the public will start to just naturally incourt higher inflation into its economic Decision Making and our job is to make sure that that doesnt happen and were committed to doing that job. It seems to me theres a chance theres a real risk that the labor market, that the labor shortages persist. Does that create a risk that takes some of the ability to manage this process out of your hands, to the extent there continue to be labor shortages and feeds into the expectations that the public has about inflation, as mentioned prominently . I think youre right, if it does turn out that we are in a world of a persistent labor shortage over time, that will be a challenging world for companies and it will certainly create upward pressure on wages and that sort of thing. Today, the labor market is demand is very, very strong still in the labor market and were printing new payroll job numbers at high level wages are running it at elevated levels, so, we think by our policy interventions, what we hope to achieve is a period of growth below trend, which will take which will cause the labor market to get back into better balance and that will bring wages back down to levels more consistent with 2 inflation over time. Thats what were trying to achieve. The shock to labor supply that we got from the pandemic was large and unexpected and unfortunately persistent. I would say in the very last labor Market Report that we got last friday, we did see a welcomed increase in Labor Force Participation. None of the less, a full percentage point where it was before the crisis and i think its important, as a society, that we have measures in place to support a strong labor market and high Labor Force Participation and that goes beyond what we can accomplish with Monetary Policy. Youve made some contrast to how things are denver today. Whats different today, you know, the high inflationary period, the late 70s and early 80s, i guess some other distinctions, i remember as a student in boston in the early 80s, in the days before the internet. I remember seeing people actually line up at the fidelity office on a weekly basis. The way that the money has changed dramatically since Milton Freedman says its always a monetary phenomenon. And you answered in part in the first question, and the spike, and the fed printed all of this money and of course we have inflation. I graduated from college in 1975, which was close to peak monetaryism and there was a focus on monetary and i recall just as you do. So, to go to this current situation, so as part of your response to the pandemic, we did resort to large asset purchases to address what were pretty severe disruptions in markets and also to support the economy and our Balance Sheet expanded dramatically. Remember, that our purchases for securities dont actually increase the quantity of government obligations held by the public. They really changed the mix because we issued Bank Reserves to pay for those securities so were not changing the quantity of obligations. Thats not to say that money growth wasnt high, it was extraordinarily high in 2020 and then slowed down in 21 and now its sluggish, whatever cause there are different theories what caused the inflation to suddenly jump out of the ground in march of 2021, whatever at that cause was the he relationship between the money supply and inflation, economic output has been much more unstable than it was in freedmans day, for a very long time. And so literally changes in monetary ago gates have not had a consistent, reliable relationship, havent been a good predictor of the economy or inflation. Of course, the economy is ever changing and that, too, could change to where it is important again, but for now, and for really, many years now, monetary aggregates dont play a role in formulation of policy and not a good way for policy and its more supply and demand and things like that. So, thats where we would be on that. That actually comes to mind at cato we have a strong aversion to a fully discretion fiat money system so we like to socialize and promote alternative frameworks that political policy and market direction that eliminates some of this discorrection. Jim mentioned a consistent theme over the years this conference has been, you know, potential monetary rules and, you know, that kind of calls into inflation whether inflation and prices are the best to use for Monetary Policy. Some folks advocated for rulesbased system such as targeting nominal gdp as something weve heard about in recent years partly because as you say, money policy is not well suited to address supply shocks. Can you share that type of approach and whether thats something that you would consider . So more broadly on rules, of course, on taylor rules have become part of the fabric of Economic Analysis and particularly Money Monetary analysis much greater than john taylor hoped when he wrote the article in 1993. No central bank and the fed has never explicitly tied our Monetary Policy decisions to any formula, including taylor rules, but taylor rules, nonetheless, are ubiquitous in all the work that we do. You have to have a way and a model of explaining how Monetary Policy will react and some kind of taylor rule is now very much part of the way, we think. In terms of nominal income targeting by the way i know at that cato is one of the home courts for targeting along with mercado and others. And i know this is a lot of wellknown experts, many of them at your institution, you know, do support nominal income targeting and ill just say that weve looked at that, and ive looked at that and come to the view that nominal income targeting is not the way to go. Ill try to explain. Noi that these are wellknown to the nonincome targeters and found to be nonpersuasive and nonetheless one thing i would interject, we have debates internally. And for us, the concept is really more wanting to socialize, a number of alternatives and try to move towards alternatives that do have more of a market basis and again, you know, remove discretion. I think thats a very healthy process and you know, the whole debate over many, many years of rules of discretion is a fascinating and important one, thats far from over, so, its really a mix of the two, i think, that but getting to nominal income targeting, weve got a dual mandate and maximum price stability. Is comes down to is nonincome the best way to promote that, i dont think it is and part of that would be difficult to explain to the public explain na of nominal, nongdp to those goals. Its a level of complexity that even some economists and policy makers struggle with, let alone the general public so it seems like it would be a reach to sort of put the you know, for us to have that be our fundamental framework. And a couple of examples that would be difficult, one in particular, would be what do you do with changes in trend growth . We have, you know, highly uncertain estimates of levels of trend growth that we amend down through the years and many years, you know, many years later we may have very different view, but its broadly understood, i think, believed, thought, that trend growth has grown considerably since the Global Financial crisis and how do you put that into a target. Raise contribution of inflation or annually reestimate trend growth and if you do that, incorporating Communications Issues and also, you know, just big chances of policy error because we dont know any of the variables, so to speak, with that level of certainty. So ill just say that its sort of really interesting and it works very well in models, but it seems difficult to implement from a practical standpoint and its not something that we have chosen to do or that we are currently looking at. You mentioned theres no mandate. You know, i dont want to ignore this during the conversation. You know, when i said earlier that, you know, we obviously have an aversion to a, you know, fully discretionary monetary system, many of us also regret the adoption of the dual mandate in lieu of a strict focus on monetary stability. The feds own website that maximum employment is driven by nonmonetary factors, is that part of the mandate . Peter, as you know, were created by congress in statute and congress assigns our goals and assigned maximum price stability. Its my view that the dual mandate has served the public well and is generally workable. In particular, at the moment, i dont see the two goals as in conflict at all, because without price stability, we will not be able to achieve the kind of strong labor market that we want for a sustained period that benefits all. So i dont see a case to moving to a single mandate, but thats really a question for congress and you know, we will of course, implement whatever mandate Congress Gives us. To your point about maximum employment, its true that and we do say that, that and have for some time that nonmonetary factors are really what drives the level of maximum employment which clearly changes through the Business Cycle and over time. But, we can and do assess that, and we do it transparency and congress has said that that should be a goal, coequal goal of price stability and again, i dont think theres a strange case for changing that and i dont think it hampers us in our pursuit and i think we can achieve both goals in the medium term. You stole my followup. You started out saying that Congress Sets the mandate and so, my followup was going to be well, should they car changing the mandate and i think youve answered that and i guess the natural followup might be, is the dual mandate werent enough, thats been talk about adding more, you know, more elements to, you know, the feds objective, with racial equity, far from the feds ability to address. In addition, you know, the feds remit from the Banking System to the broader Financial System and its regulatory responsibilities were why they expanded in the wake of the financial crisis. How does continually expanding not undermine the focus of monetary stability beyond things such that, you know, the employment element of the mandate . So, i think our current mandate is appropriate and i do not i would not want to see it narrowed or broadened for that matter. Weve got narrow and weve got well defined goals that were supposed to pursue. What we get with that and what weve gotten is a precious grant to pursue those without direct political control. Thats maximum employment price stability and i think that that dual mandate has served the public well, i really dont think that it would not be a good idea to broaden it to goals that might be mandates and achieve with our tools. More broadly than that, its really important to stick to our assigned task and not those of congress. If we do that and do stray from core mandates, that will undermine the case for our independence. I think that fed independence is an institutional arrangement thats served the public well and i think thats pretty welldocumented and accepted. I mentioned a couple of times, you know, our concerns about a fully discretionary system and one of the biggest of those concerns is that in the face of, you know, large economic dislocations, you know, weve been running what really amount to unprecedented experiments. You know, i would cite the, you know, quadrupling of the fed Balance Sheet in the wake of 2008 financial crisis and then, you know, doubling it again during the pandemic. You know, to your credit, it was right before the pandemic that you were beginning to move towards reducing the Balance Sheet. Can you shed some light for us on where you hope to take the Balance Sheet over time, and you know, whats the way that you you know, really try to get there . Do you see the fed ever moving back to a scarce reserve framework like it had before the 2008 crisis in. Sure, so, in the last cycle, an of we ended our asset purchases, we froze the size of the Balance Sheet in 2014 and then allowed it to shrink passively, relative to the size of the economy, as it grew, the Balance Sheet didnt grow. In 2017, we began to allow maturing assets to run off and that went on until 2019. By the end of that period, we had a Balance Sheet that was significantly smaller relative to the size of the economy and smaller than it was overall. So, then we resumed asset purchases, as you know in 2020 and now we embark on shrinking the Balance Sheet and the test will be back to the level that satisfies the publics demand for currency and reserves and things like that, and also with the reserves maintained at levels consistent with our reserve regime. The Balance Sheet is substantially larger now obviously and consequently the runoff process is designed to be substantially faster than in the last cycle to the tune of on the order of a trillion dollars per round per year and once its up to full speed. The process began in june and the pace of the Balance Sheet rises this month. The plans are spelled out in detail on our website around the january and may meetings. And of course, one thing we always say were prepared to adjust the details of the plan based on economic and market developments at anytime. As far as returning to a scarce reserve regime, i guess i would say that i think that our current operating framework is a better one and i dont see a case for returning to scarce reserves. Now, why is that . So the world has really changed as a result of the Global Financial crisis in the pandemic. The scarce reserve framework where theres sometimes volatile demand for assets, and Central Banks may need to rely on asset purchases from time to time in response to severe shocks and remember the large Financial Institutions hold very, very large quantities of safe assets now as a liquidity buffers and includes a lot of the reserves. The bottom line is that the quality of reserves is just so much higher, it would seem to be impractical to manage the scarcity and the demand will be volatile, too. So, it doesnt seem practical and again, we think that the Current System works well and provides a lot of liquidity in the system which is kind of a net game. All right. And i thought it might be time to shift gears a little bit away from inflation and Monetary Policy. I remember on the first year i joined cato, i read an oped from the wall street journal advocating currency and kind of horrified at the prospect and said so in a letter to the editor, and since then, the fed has formally stepped into the Digital Currency ring and Digital Currency has obviously been a recurring theme in these conferences, but the fed has stepped into this arena with a discussion paper on a central bank Digital Currency and several speeches from fed governors. You know, our team has reviewed the more than 2000 comments that the feds central bank and Digital Currency discussion paper received and find that about twothirds of them are concerned or outright opposed to the idea. Commenters raised concerns of financial privacy, financial oppression, and meetings in the bank system and some of the same concerns that led me to write that letter to the editor seven years ago. How can the serious concerns about freedom be reconciled with the Digital Currency . Will et let me start we havent made any decisions whether to issue a cbtc and look at the pros and cons and the questions, and expected that valuation process is going to take time appropriately so. Secondly, we do not intend to proceed with issues of the cbtc without support of the congress ideally in the form of authorizing law. So we did get. It was gratifying, 2000some comments and i wont tell you that i read those read all of them, but i read some of them and read the summaries and its very, very a lot of very thoughtful concerns including the ones that you raised and there are things that were considering very seriously. So we in our own paper we suggested that the cbdc in our jurisdiction should be privacy protected, intermediated, widely transferrable and identity verified. On Privacy Protection, very, very important and we all see whats happening with the digital rnb and you know, the a you shalls with privacy. We would know the want a world in which the government sees realtime every Money Transfer anybody makes, that would not be something that would be at all attractive in the american context. So Privacy Protection is going to be extremely important and were attentive to striking a balance, of course, between Law Enforcement and Privacy Protection, but that can be managed in the same way that its currently managed in the Banking System or some similar way. In terms of another issue, really, is intermediatation, you know, and that really is a question if, say, you had an interest bearing cbdc, it could be attractive and draw deposits out of the Banking System and limit credit availability. And thats another issue to be managed. I think one. Things that actually cato mentioned and your was also the runrisk issue, are you creating very attractive in a panic or severe stress situation and that, you know, fostering runs. Look, its going to be, as i mentioned, its going to be we think our role is this. We want to carefully and thoroughly analyze the Public Policy and technological challenges, Public Policy tradeoffs and technological challenges and thats what were doing. The idea is that this will lead all of us to a better understanding of those tradeoffs and prepare the way for hopefully a wellinformed decision on whether and when to issue a dollar, central bank currency. Thats what we think our role is and we think that the fed is the right institution to do that, we can proceed without, you know, were a nonpartisan institution, nonpolitical institution that can do these things and i hope support analysis and intelligent decision when its time to make that. Its something well have a lot to say on in the future and as well, at least from the perspective of, you know, of privacy concerns and being a watch dog. You know, its a very Important Role for cato. I do want to ask about cryptocurrency. You know, but first i should probably in fairness reveal that the gentleman who photo bombed janet yellen five years ago by holding up a buy bitcoin sign behind her during her Humphrey Hawkins testimony, earlier this year became my soninlaw, so thats a little disclaimer, im going to put out there. [laughter] but without debating the merits of cryptocurrency or products, ill say that in the monetary arena, cato stands for nothing than desire to see interest in Monetary Policy and more people concerned about the discretionary fiat system and also, you know, we want to see private market innovation and experimentation in developing alternatives and crypto is such a great example of this. Theres a long history of government and regulation thwarting such experimentation and innovation and which we find very disappointing. So, im wondering if you can respond to these concerns, namely that regulators might ultimately, you know, crypto to the extent that it does develop into a viable alternative system . So, talk about in two pieces. One is unbacked cryptocurrencies as such and those do not appear to offer, have not offered and do not appear to offer much in the way of Public Interest in using them as payments, lets say. Its really, its really a its not a great store value. What it is, its speculative asset, not backed by anything. It could be an argument thats during the Development Phase and something that we could see emerge, but yes. Be that as it may. And i also have close family members who offer that perspective vigorously as you suggest. [laughter] but stable coin is a different thing and the question is, are there forms of private money live stable coin which can play a role in our Financial System which would and the answer is, of course, that we dont want to stand in the way of appropriate innovation, particularly including you know, digital innovation, but we think that Something Like that, which is, you know, purporting to be money would need to be appropriately regulated and you know, i hear that wide agreement on that, by the way, from a lot of the stable coin companies now are seeing that as part of getting to a place where they are a legitimate part of the Financial System. So, i think you need regulation and people are going to think something is money, then it needs to actually have the qualities of money. And you know, if it doesnt, then you dont want i dont think you want to take money and make it into just another Consumer Product where sometimes it fails and sometimes its good. You want it to be guaranteed to be good. If the public is going to look at it like it was a dollar, you would want to have clarity, transparency, full reserves of liquid, high quality assets and things like that, thats all. And i think that we need legislation on this just, you know, its typical of technological innovations, there isnt a Regulatory Framework that really gets after payments, stable coins. You know, and so, i think thats whats needed, but dont i wouldnt think of us as being opposed to that kind of innovation, where more of the people saying, among others, that we need appropriate regulation. Yeah, and the devil is ultimately in the details. While we have the debates, we would concede were living in a world of innovation and promote add life touch, a market focus approach because there is, there is a real risk of, again, you know, having an impact on the development of innovations and thwarting what could be promising, promising and useful innovation. You know, and i agree with that. We dont want to be in that place, we want to be in favor of innovation, but also appropriate regulation. And ultimately, some of the people who end up driving, you know, the regulation might be you know, as you mention legislation. You know, the end product may not meet the objectives that you and i both say that we want. And another topic, you know, as long as i can remember successive chairmans have warned of unsustainable fiscal path. Regrettably no one in congress and the white house seems to be listening. And i particularly during a period of high inflation ive been continually chagrinned at you know, the number of big spending bills that continue to come down the pike of legislation thats passed. You know, long after i think the crisis of the pandemic has ended. And the lessons of the financial crisis and covid might be keeping our fiscal house in order is essential as preparation to meet the challenges and inevitable economic dislocations, but the opposite lessons seems to have been learned that we can keep spending without a day of reckoning and i just, im very concerned about the day of reckoning and what risks were playing for the economic wellbeing for future generations and i just wonder, you know, your thoughts on those concerns and you know, the potential timing of that days arrival and its consequences. And whether you have any ideas how we can build a reconstituency for fiscal responsibility in america. So, i do share those concerns and in fact i was working on those issues before i joined the fed. At the fed, my position needs to be that fiscal policy is really the responsibility of congress and the administration. It wouldnt be appropriate for me to comment too much on specific policy proposals or laws. More to the point, with inflation running so far above 2 , this is probably an especially good time to focus on achieving our own mandate rather than doling out advice to others. But like my predecessors, ill point out our fiscal policy is not on a sustainable path and it hasnt been for some time and well need to get back to a sustainable path sooner or later. To your point, sooner is better than later and i guess ill just leave it at that. All right. Thanks, were getting close to the end of our time, so im thinking about a closing question. I wonder, with everything that we discussed thus far, what are some of the key lessons that youve learned since you became fed chair and what advice might you give to a lot of the young monetary scholars out there that cato and other places are working it develop . I guess i would say both experience and studying history are Great Teachers of what can be hard lessons. And i actually mentioned three lessons at jackson hole 10 days ago and those were first, that the fed does have and accept responsibility for price stability, even now, some are questioning that, but that, to us, is settled. Secondly, that Inflation Expectations are really important and need to be carefully monitored because if they do move up, they can make the job of getting back to price stability so much harder and third is that, you know, the record is of theres a record of failed attempts to get inflation under control, which only raises the ultimate cost to society of getting under control, hence the need to do this job now and keep at it. So, those are three lessons. I would say more broadly, i know the really fundamental lesson to me the economy is ever changing and highly complex and you know, we see that today, around the world. Many nations are experiencing the first high inflation in 40 years, all around the world. Different countries have different competition and back stories, but its really quite global and the question really is, is this going to be temporary thing thats really related to the pandemic in some way or is there actually something more structural and persistent happening . For example, if were moving to a world where were going to see more frequent, larger and more persistent supply shocks for whatever reason, that will have critical and difficult implications for the conduct of Economic Policy in particular. So this is not possible to know right now, but its certainly a question that looms. I mean, to me, to sum it up, i would just say economics is not physics. There isnt any specific temperature in which the economy boils over. It does boil over from time to time and when that happens it often takes many years of analysis, discussion and debate to reach general agreement why thats happened. And the point is that were always making Monetary Policy under high uncertainty about the structure of the economy and the path ahead. That makes our work challenging, and it also makes it getting it right very important for the people that we serve and we do think about that every day. So, our understanding of the economy has to evolve, as the economy evolves, as time passes we do learn more and i think its okay to follow the evidence and change ones minds and the advice shouldnt be to say that to change their view and explain why. I find that refreshing when i see my view has evolved in the face of the evidence. And i guess one more word to close for this young researchers you mentioned, and this is a commercial for Public Service and for the fed. So the fed is a very special place where people can combine policy research with policy making, this is a place that has all of us have a very strong sense of mission in our work thats satisfying and that mission is to serve the public and our work really matters to the public. I would say theres no higher calling or more satisfying mission. So i hope that young researchers and economists and others will consider Public Service as part of their career for me, its only been a part and consider working at the fed where youll be most welcome. Thanks for that. I mean, i share those sentiments. You know, you mentioned your work at the Bipartisan Research Center and you know, im at cato because i care about the future of our country and the future, of course, of liberty and freedom in america, and for the kind of world future generations are going to grow up and theyre going to have the same opportunities that weve had to live in a free country and to pursue, you know, their American Dream and being part of that is a real privilege. I know, you know, at cato, we work very hard to raise consciousness of Monetary Policy and monetary reform. We wish we think that this is a very important topic and that more americans should Pay Attention to it, even though its complicated. We wish there were more policy organizations that would prioritize this policy area and you know, raise their level of resources dedicated to this area. And as you know, mr. Chairman, you know, cato is not shy about being critical and we enjoy intellectually jousting with awen your team, but we also recognize that, you know, we share common, you know, goals and objectives for our country and its in the countrys best interest by which that jousting and those debates and areas of disagreement, its within that context that they occur. And so, i do thank you for your work, youre in a challenging position and i thank you very much for being part of this conference today. Its been a real pleasure. Thanks, peter, the pleasure is mine, too. Thanks so much and with that, im just going to let all the viewers know that were going to be taking a break now until the top of the hour and reconvene with the next panel at 10 a. M. So well see you then. Chairman powell, thanks very much again. Queen elizabeth the second has died at the age of 96. She was born on april 21 in Mayfair London in the u. K. She was the daughter of king george the sixth and Queen Elizabeth. Following her fathers death, she became queen ascending to the throne in 1952. Queen elizabeth was the longest lived and longestserving british monarch. Prince charles, her firstborn is heir to the throne. Friday members of the house of commons honor her late majesty, Queen Elizabeth the second. Live coverage begins at seven eastern on cspan two. You can watch on our free mobile video app, cspan now. Cspan is your unfiltered view of government. We are funded by these Television Companies and more, including comcast. You think this is just a Community Center . It is way more than that. Comcast is partnering with 1000 Community Centers to create wifi so that students from low income families can get the tools they need. Comcast supports cspan as a Public Service, along with these other television providers, giving you a front row seat to democracy. Treasury secretary janet yellen was in dearborn michigan, where she toured the worlds First Electric vehicle center. At