| 00:02:06 |
Herbener, Jeffrey - Chair
KEEP THE MIKE UP CLOSE. >> AND DISTINGUISH MEMBERS OF THE COMMITTEE, IT IS AN HONOR TO APPEAR BEFORE YOU. LEFT TO THE MARKET THE PRODUCTION OF ALL...
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| 00:06:34 |
Klein, Peter - Director
IMPORTANT TOPIC. MY TESTIMONY ANALYZES THE FED AND REFORMS CONSIDERED TODAY FROM THE PRIF OF ORGANIZATIONAL ECONOMIST. HOW DOES THE RESERVE SYSTEM MEASURE...
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| 00:11:28 |
Paul, Ronald "Ron" M.D. - U.S. Representative, [R] Texas
WE SO DISAPPOINTLY NEED IT. THANK YOU. -- SO DESPERATELY NEED IT. >> THANK YOU. I RECOGNIZE DR. TAYLOR. FIVE MINUTES. >>
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| 00:11:38 |
Taylor, John B. - Professor
THANK YOU, MR. CHAIRMAN, FOR THE OPPORTUNITY. RANKING MEMBER CLAY. THANKS FOR BRINGING THESE BRANT ISSUES FOR PUBLIC DISCUSSION. IN YOUR OPENING REMARKS,...
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| 00:16:30 |
Galbraith, James K. - Professor
CHAIRMAN PAUL, RANKING MEMBER CLAY, IT'S AN HONOR TO BE HERE, ESPECIALLY I AM A FORMER RANKING MEMBER OF THE STAFF OF THIS COMMITTEE AND I WAS PART OF...
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| 00:21:45 |
Rivlin, Alice M. - Vice Chair
THE DUAL MANDATE. I BELIEVE THAT THE DUAL MANDATE HAS SERVED THE UNITED STATES WELL, AND THAT IT WOULD BE A MISTAKE TO RESTRICT THE FED'S POLICY ACTIONS...
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| 00:26:41 |
Paul, Ronald "Ron" M.D. - U.S. Representative, [R] Texas
I NOW YIELD MYSELF NOW FIVE MINUTES FOR QUESTIONING. FIRSTOFF, I'D LIKE TO ADDRESS MY QUESTION TO DR. HERBENER AND DR. KLEIN. TODAY, EVEN WITH OUR PREVIOUS...
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| 00:27:27 |
Herbener, Jeffrey - Chair
DON'T SEE TOO MUCH EVIDENCE -- >> MAKE SURE I CAN HEAR YOU. >> I DON'T SEE TOO MUCH EVIDENCE THAT IN THE PERFORMANCE OF THE FED, THE CONCENTRATION ON...
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| 00:28:36 |
Klein, Peter - Director
INCENTIVES OF THE CENTRAL BANK, THE CENTRAL BANK ALWAYS HAS A STRONGER INCENTIVE TO INCREASE, BE ACCOMODATIVE AND INCREASE CREDIT RATHER THAN BE CONTRACTION...
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| 00:29:34 |
Taylor, John B. - Professor
AND GROWTH OF M 3? >> I WOULD BE IN FAVOR OF THE FED DOING THAT. I THINK IT'S THE MORE EMPHASIS ON MONEY STATISTICS, THE BETTER, IN MY VIEW. THEY...
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| 00:30:54 |
Galbraith, James K. - Professor
EXACTLY? >> I BELIEVE, MR. CHAIRMAN, AND I WOULD BE CAUTIOUS ABOUT TANGLING WITH YOU ON THIS, THAT THE AUTHORITY FOR THE FEDERAL RESERVE ACT SIMPLY COMES...
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| 00:32:06 |
Rivlin, Alice M. - Vice Chair
OUT? >> I DON'T KNOW. THAT WAS, I BELIEVE, AFTER I LEFT. I'M ALWAYS IN FAVOR OF MORE INFORMATION RATHER THAN LESS. BUT THE EMPHASIS ON THE MONETARY...
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| 00:33:18 |
Clay, William Lacy Jr. - U.S. Representative, [D] Missouri
DR. RIVLIN, AT ANY TIME DURING YOUR TENURE ON THE BOARD OF GOVERNORS, DID THE DUAL MANDATE INTERFERE WITH THE BOARD'S ABILITY TO
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| 00:33:32 |
Rivlin, Alice M. - Vice Chair
SET MONETARY POLICY? >> NO, I DON'T BELIEVE IT DID, MR. CLAY. SETTING MONETARY POLICY IS REALLY DIFFICULT. YOU'RE ALWAYS WEIGHING DIFFERENT CONSIDERATIONS...
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| 00:35:31 |
Galbraith, James K. - Professor
WORKING DIRECTLY WITH CONGRESSMAN HAWKINS. >> YES. >> AT THAT TIME. OF COURSE, AN ACADEMIC POLICY MANDATE WAS NOT A NEW THING FOR THE UNITED STATES....
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| 00:37:44 |
Klein, Peter - Director
OF, THE PRICE OF OIL FOLLOW A LITTLE BIT OUTSIDE THE MANDATE OF THE MONETARY AUTHORITY. SO CERTAINLY RISING ENERGY PRICES IS ONE MANIFESTATION OF...
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| 00:38:34 |
Hayworth, Nan - U.S. Representative, [R] New York
THANK YOU, MR. CHAIRMAN AND THANK YOU AGAIN FOR HOLDING THIS HEARING AND FOR YOUR LEADERSHIP ON THIS CRUCIAL QUESTION. I'D LIKE TO ASK THIS QUESTION...
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| 00:40:08 |
Klein, Peter - Director
DR. KLEIN, PERHAPS YOU COULD START WITH THAT, PLEASE? >> CERTAINLY IT'S THE CASE THE JOB GIVEN TO THE FED BECOMES MORE DIFFICULT UNDER THE CIRCUMSTANCES...
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| 00:41:27 |
Herbener, Jeffrey - Chair
BE ABLE TO APPEAL DIRECTLY TO A PRINTING PRESS OR TO SOME AGENCY THAT WOULD MONETIZE DEBTS THAT ARE ISSUED. I WOULD BE PROFITED AS WELL, ANYONE WOULD,...
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| 00:41:46 |
Taylor, John B. - Professor
THINK IF YOU HOLD OUT YOUR SHINGLE, SAY YOU'RE OPEN FOR BUSINESS, THEN PEOPLE WILL COME, AND I THINK THAT'S BASICALLY WHAT HAS HAPPENEDTHE FEDERAL RESERVE...
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| 00:42:55 |
Galbraith, James K. - Professor
TO DISASTROUS DEREGULATION AND DESUPERVISION OF THE FINANCIAL SECTOR, WHICH LED TO A CATASTROPHIC MELTDOWN OF THAT INDUSTRY AND OF THE SOLVENCY OF MUCH...
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| 00:44:10 |
Schweikert, David - U.S. Representative, [R] Arizona
MR. CHAIRMAN. FORGIVE ME, BUT THIS IS SORT OF AN ESOTERIC QUESTION, AND NO POINTING AND LAUGHING, PARTICULARLY FOR ALL OF YOU WITH Ph.D.s. WE TAKE...
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| 00:45:33 |
Galbraith, James K. - Professor
THE FED -- >> CAN YOU PULL THE MIKE REALLY CLOSE? >> I THINK THE FED BALANCE SHEET, OF COURSE, EXHIBITS THE SOURCE OF THE BUBBLES THAT MANIFEST IN...
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| 00:46:51 |
Rivlin, Alice M. - Vice Chair
ASSET BUBBLES ARE A REAL PROBLEM FOR THE FED, BUT NOT BECAUSE OF THE BALANCE SHEET EFFECT. BECAUSE MONETARY POLICY IS NOT A GOOD TOOL FOR DEALING WITH...
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| 00:48:36 |
Galbraith, James K. - Professor
SO. IS THERE A SITUATION IN ONE WAY TO INTERPRET YOUR QUESTION, ASK WHETHER THERE IS A SITUATION IN WHICH THE MARKETS MIGHT SELL OFF U.S. BONDS RAPIDLY...
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| 00:49:39 |
Paul, Ronald "Ron" M.D. - U.S. Representative, [R] Texas
ABLE TO STAY, BUT I HAVE A QUESTION FOR DR. RIVLIN, AND ALSO FOR DR. KLEIN. I DON'T WANT TO GET SO MUCH IN ON THE CAUSE BUT AN ASSESSMENT ON HOW SERIOUS...
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| 00:50:18 |
Rivlin, Alice M. - Vice Chair
ABOUT? >> I'M VERY WORRIED ABOUT EUROPE. I THINK THE AUSTERITY POLICIES ARE THE WRONG POLICIES AT THE MOMENT, BUT THEY HAVE, THEY'LL MAKE THE SITUATION...
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| 00:51:14 |
Klein, Peter - Director
HUGELY ACCOMMODATIVE POLICY, THE ZERO INTEREST RATES AND SO ON, HAVE TAKEN A BAD SITUATION AND SEWN THE SEEDS FOR MAKING THAT SITUATION MUCH, MUCH WORSE....
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| 00:52:04 |
Clay, William Lacy Jr. - U.S. Representative, [D] Missouri
TO START WITH A PANEL-WIDE QUESTION, PERHAPS YOU CAN BRIEFLY TRY TO ANSWER IT. STARTING WITH DR. HERBENER. DO YOU THINK THE FEDERAL RESERVE'S MONETARY...
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| 00:52:41 |
Herbener, Jeffrey - Chair
I THINK WHEN THE -- WHEN THE FED ENGAGES IN ANY KIND OF EXPANSIONARY MONETARY POLICY, THEY ALWAYS GENERATE THE SAME ILL-EFFECT IN THE ECONOMY. THEY...
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| 00:53:41 |
Klein, Peter - Director
TARGETING AS OPPOSED TO TARGETING NOMINAL INCOME IS SORT OF A FALSE DICHOTOMY. SOMETHING REPRESENTATIVE PAUL MENTIONED IN THE FIRST ROUND WAS THE IDEA...
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| 00:54:40 |
Taylor, John B. - Professor
TARGET. THE FED ANNOUNCED 2%. IN THE MEANTIME WE CONTINUE TO DO THIS HIGHLY INTERVENTIONIST POLICY. SEEMS TO ME THAT IS NOT ENOUGH, AND THAT'S...
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| 00:55:08 |
Galbraith, James K. - Professor
HUMPHRIES-HAWKINS LAW THERE WAS AN INTERIM TARGET FOR 4% UNEMPLOYMENT. 3% INFLATION, TO BE ACHIEVED AFTER FOUR YEARS. IT TOOK 22 UNTIL ALICE RIVLIN ...
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| 00:55:52 |
Rivlin, Alice M. - Vice Chair
RIGHT. I WASN'T A BIG ENTHUSIAST OF SETTING AN EXPLICIT TARGET, BUT 2% SALVE RIGHT. AS LONG AS YOU DON'T TAKE IT TOO SERIOUSLY. BECAUSE THERE MIGHT...
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| 00:56:26 |
Taylor, John B. - Professor
PLEASE? >> I THINK THE QUANTITATIVE EASING, QE 1 AND QE2 WERE NOT APPROPRIATE. THAT'S WHY THE BALANCE SHEET IS AS BIG AS IT IS. IF WE HAD JUST DONE THE...
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| 00:57:43 |
Klein, Peter - Director
OF THOSE BUBBLES, BUT AS TO YOUR QUESTION ABOUT THE BALANCE SHEET, I AGREE WITH DR. TAYLOR BUT WOULD ADD IT ISN'T JUST THE OVERALL SIZE OF THE BALANCE...
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| 00:58:19 |
Schweikert, David - U.S. Representative, [R] Arizona
OF THE BALANCE SHEET. >> DR. GALBRAITH AND THEN WE'RE GOING TO BOUNCE BACK. >> DO YOU HAVE A COMMENT ON, FIRST, HOW BIG THE BALANCE SHEETS CAN GET,...
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| 00:58:46 |
Galbraith, James K. - Professor
LOOKS AT THE COMPOSITION OF THE BALANCE SHEET, WHAT'S IN THE PORTFOLIO, ONE LA TO EVALUATE THE QUALITY OF THE ASSETS, AND THAT IS A PROCESS WHICH...
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| 00:59:13 |
Herbener, Jeffrey - Chair
GOING TO UNWIND THE BALANCE SHEET, NOT HOW BIG IS IT GOING TO GET? BUT WHAT WILL BE THE PROCESS BY WHICH THEY -- TAKE THESE ASSETS OFF THE THEIR BOOKS,...
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| 01:00:13 |
Rivlin, Alice M. - Vice Chair
TO FACE UP TO THE HARD CHOICES, AND THEY -- THE FED'S BUYING BONDS IS A SMALL PART OF THE WHOLE WORLD BUYING BONDS, AS DR. GALBRAITH SAID. COUNTER TO...
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| 01:01:43 |
Green, Al - U.S. Representative, [D] Texas
I'M ONE OF THE MEMBERS WHO SIGNED THE LETTER REQUESTING SUCH A HEARING, AND I THANK YOU FOR HONORING THE REQUEST. TO THE WITNESSES, LET'S START WITH...
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| 01:02:40 |
Herbener, Jeffrey - Chair
BE ABOLISHED BECAUSE THE CONDUCT OF MONETARY POLICY UNDER THE FED CAN BRING NO BENEFIT TO SOCIETY AT LARGE. AS I MENTIONED -- >> IN YOUR OPINION --...
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| 01:03:17 |
Klein, Peter - Director
AS AN EXAMPLE OF A CENTRAL BANK OR THE INSTITUTION OF CENTRAL BANKING MORE GENERALLY. IN MY WRITTEN TESTIMONY I GIVE REASONS WHY THE INSTITUTION OF...
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| 01:03:58 |
Taylor, John B. - Professor
STATEMENT. MR. TAYLOR? >> I THINK WE SHOULD REFORM THE FED. I THINK THE EVIDENCE ESPECIALLY IN THE LAST FEW YEARS IS THAT THE POLICY'S NOT WORKING....
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| 01:04:37 |
Galbraith, James K. - Professor
WHOLE, CONGRESSMAN, THE 20th CENTURY WAS BETTER THAN THE 19th AND HAVING A CENTRAL BANK WAS A MODEST UTEFUL PART OF THE INSTITUTIONAL STRUCTURE IT GAVE...
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| 01:05:05 |
Rivlin, Alice M. - Vice Chair
STRONG AND INDEPENDENT CENTRAL BANK. I THINK THE EVIDENCE OF THE 19th CENTURY IS NOT AS ENCOURAGING AS SOME WOULD THINK, AND THE IDEA THAT THE WORLD'S...
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| 01:07:04 |
Hayworth, Nan - U.S. Representative, [R] New York
CHAIRMAN. I HAVE A THOUGHT FOR US AS WE CONCLUDE, AND I THANK YOU SO MUCH FOR YOUR INSIGHTS, EACH OF YOU. IT STRIKES ME THAT THE SIZE OF THE FED'S BALANCE...
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| 01:08:06 |
Rivlin, Alice M. - Vice Chair
DIVISION AND THE DOMENICI COMMISSION AND OTHER GROUPS THAT HAVE ALL COME TO THE CONCLUSION WE REALLY NEED TO GET OUR FISCAL HOUSE IN ORDER SO THAT THE...
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| 01:08:32 |
Klein, Peter - Director
A TREMENDOUS POLITICAL CHALLENGE. WHETHER IT TAKES A MAJOR CRISIS TO BRING FORTH THE POLITICAL WILL TO MAKE THE NECESSARY CHANGES I DON'T KNOW, BUT I...
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| 01:08:57 |
Herbener, Jeffrey - Chair
SOMETHING? >> WELL I THINK OUR SITUATION IS PERHAPS EVEN MORE PRECARIOUS THAN THEIRS, GIVEN WHAT THE FED HAS DONE IN THE -- IN THE WAKE OF THE CRISIS...
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| 01:09:31 |
Taylor, John B. - Professor
BE FIXED OR WE WILL BE LIKE EUROPE, BUT, PLEASE, DON'T FORGET ABOUT MONETARY POLICY. IT TENDS TO BE ARCANE, TENDS TO BE PEOPLE TUNE OUT, IT'S DIFFICULT,...
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| 01:11:55 |
Paul, Ronald "Ron" M.D. - U.S. Representative, [R] Texas
TESTIMONY. I FOUND THE HEARINGS VERY FASCINATING, BECAUSE EVEN THOUGH WE MIGHT NOT AGREE ON THE CAUSE AND EXACTLY WHAT WE HAVE TO DO, IT SEEMED LIKE...
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NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.