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

Building an Economy that Works for Everyone - Why You Should Care About the Federal Reserve

Webinar Overview • This webinar is being recorded.

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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)

Alexander Berger, GiveWell

Jared Bernstein, Center on Budget and Policy Priorities

FED! (GOOD GOD, Y’ALL) WHAT IS IT GOOD FOR? Jared Bernstein CBPP

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).

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).

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

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…

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

Ady Barkan, The Center for Popular Democracy

Ok, so the Fed matters.

What are we doing about it?

Step One: Popular Education, Base-Building,

and Coalition Building

Step Two: Making a Splash in Jackson Hole

Esther George, Kansas City Fed President

“Welcoming” the bankers

Fed Chair Janet Yellen

Stanley Fischer: the second most powerful Fed official

The press loved our story

Step Three: Meeting with Janet Yellen and

the Board of Governors

A big win The Fed sets up a Community Advisory Council with a “particular focus on the concerns of low- and moderate-income populations.”

Step Four: Engagement with the Regional

Presidents

March 5 Day of Action

We’ve met with Fed Presidents: Kansas City

Boston San Francisco (July 13)

And high ranking staffers: Dallas

Philadelphia Minneapolis

St. Louis

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!

Q & A Use the “chat function” on your screen to ask a question.

Thank You!

For more information, visit: www.gistfunders.org