Quotes from Chairman Greenspan

A collection of quotes from speeches and testimony by Fed Chairman Alan Greenspan. Click on the link in each quote to read the entire speech on the Board of Governors web site.

2005 | 2004 | 2003 | 2002 | 2001 | 2000

2005

On international imbalances
"If the currently disturbing drift toward protectionism is contained and markets remain sufficiently flexible, changing terms of trade, interest rates, asset prices, and exchange rates will cause U.S. saving to rise, reducing the need for foreign finance and reversing the trend of the past decade toward increasing reliance on it. If, however, the pernicious drift toward fiscal instability in the United States and elsewhere is not arrested and is compounded by a protectionist reversal of globalization, the adjustment process could be quite painful for the world economy. "
—December 2, 2005
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On budget policy
"Our budget position will substantially worsen in the coming years unless major deficit-reducing actions are taken.... Reinstating a structure like the one formerly provided by the Budget Enforcement Act of 1990 would signal a renewed commitment to fiscal restraint and help restore discipline to the annual budgeting process."
—December 2, 2005
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On the economic outlook
"The longer-term prospects for the U.S. economy remain favorable. Structural productivity continues to grow at a firm pace, and rebuilding activity following the hurricanes should boost real GDP growth for a while. More uncertainty, however, surrounds the outlook for inflation."
—November 3, 2005
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Remarks at the dedication of the Houston Branch building
"It is with great pleasure that I help you dedicate this building to a man I have long admired, Mike Kelley. I wish all of you the best with this new facility."
—October 27, 2005
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Remarks on the receipts of the Truman Medal for Economic Policy
"As hard as this can be to achieve, economic policy should take the long view. Although pressures to use the government's tools of economic management to achieve one or another short-term aim are always present, the tools of government are, in fact, most appropriately used to create an environment in which private economic activity can flourish over the longer run. "
—October 26, 2005
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On energy
"Although the global economic expansion appears to have been on a reasonably firm path through the summer months, the recent surge in energy prices will undoubtedly be a drag from now on.... The effect on growth would have been greater had oil not declined in importance as an input to world economic activity since the 1970s."
—October 17, 2005
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On economic flexibility
"In my more than eighteen years at the Federal Reserve, much has surprised me, but nothing more than the remarkable ability of our economy to absorb and recover from the shocks of stock market crashes, credit crunches, terrorism, and hurricanes—blows that would have almost certainly precipitated deep recessions in decades past."
—October 12, 2005
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On economic flexibility
"History cautions that extended periods of low concern about credit risk have invariably been followed by reversal, with an attendant fall in the prices of risky assets. Such developments apparently reflect not only market dynamics but also the all-too-evident alternating and infectious bouts of human euphoria and distress and the instability they engender."
—September 27, 2005
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On mortgage banking
"The apparent froth in housing markets may have spilled over into mortgage markets. The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other, more-exotic forms of adjustable-rate mortgages, are developments that bear close scrutiny."
—September 26, 2005
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On the housing boom
"The housing boom will inevitably simmer down. As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease. As a consequence, home equity extraction will ease and with it some of the strength in personal consumption expenditures. The estimates of how much differ widely."
—August 27, 2005
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Reflections on central banking
"The developing protectionism regarding trade and our reluctance to place fiscal policy on a more sustainable path are threatening what may well be our most valued policy asset: the increased flexibility of our economy, which has fostered our extraordinary resilience to shocks."
—August 26, 2005
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Monetary policy report to Congress
"Our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures. In our view, realizing this outcome will require the Federal Reserve to continue to remove monetary accommodation. This generally favorable outlook, however, is attended by some significant uncertainties that warrant careful scrutiny."
—July 20, 2005
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On China
"It is in our interest and that of the global economy that China continue to progress toward becoming a more market-based, productive, and dynamic economy in which individual initiative, not government decisionmaking, is the fundamental strength behind economic activity. For our part, it is essential that we not put that outcome, or our future, at risk with a step back into protectionism."
—June 23, 2005
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Central Bank panel discussion
"After its recent very rapid advance, the hedge fund industry could temporarily shrink, and many wealthy fund managers and investors could become less wealthy. But so long as banks and other lenders to these ventures are managing their credit risks effectively, this necessary adjustment should not pose a threat to financial stability."
—June 6, 2005
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On energy
"The effect of the current surge in oil prices, though noticeable, is likely to prove less consequential to economic growth and inflation than in the 1970s."
—May 20, 2005
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On Government-Sponsored Enterprises
"Without the needed restrictions on the size of the GSE balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for housing."
—May 19, 2005
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Commencement address at the Wharton School
"Rules exist to govern behavior, but rules cannot substitute for character.... The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake."
—May 15, 2005
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On risk transfer and financial stability
"Market participants and policymakers must be aware of the risk-management challenges associated with the use of derivatives to transfer risk, both within the banking system and outside the banking system. And they must take steps to ensure that those challenges are addressed."
—May 5, 2005
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On budget process reform
"Crafting a budget strategy that meets the nation's longer-run needs will become ever more difficult the more we delay. The Congress must choose which alternatives are the most valued in the context of limited resources."
—April 21, 2005
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On consumer finance
"In this increasingly competitive and complex financial services market, it is essential that consumers acquire the knowledge that will enable them to evaluate products and services from competing providers and determine which best meet their long- and short-term needs."
—April 8, 2005
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On regulatory reform of the government-sponsored enterprises
"Without restrictions on the size of [government-sponsored enterprise] balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership."
—April 5, 2005
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On energy
"Altering the magnitude and manner of U.S. energy consumption will significantly affect the path of the U.S. economy over the long term.... The recent shift in expectations, however, has been substantial enough and persistent enough to bias business-investment decisions in favor of energy-cost reduction."
—April 5, 2005
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On the future of the Social Security program and economics of retirement
"Focusing on solvency within the Social Security system, without regard to the broader macroeconomic picture, does not ensure that the real resources to fulfill our commitments will be there.... In addressing Social Security's imbalances, we need to ensure that measures taken now to finance future benefit commitments represent real additions to national saving."
—March 15, 2005
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On bank regulation
"To be effective regulators, we must also attempt to balance the burdens imposed on banks with the regulations' success in obtaining the intended benefits and to discover permissible and more-efficient ways of doing so. Because we understand that regulatory changes can be quite costly, we recognize as well the important regulatory responsibility to balance the cost of change with the desired benefits."
—March 11, 2005
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On globalization
"We may not be able to usefully determine at what point foreign accumulation of net claims on the United States will slow or even reverse, but it is evident that the greater the degree of international flexibility, the less the risk of a crisis. "
—March 10, 2005
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On the tax system
"A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed-up resources could be used for more productive purposes. Thus, greater simplicity would, in and of itself, engender a better use of resources."
—March 3, 2005
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On the current economic outlook and current fiscal issues
"In the seven months since I last testified before this Committee, the U.S. economic expansion has firmed, overall inflation has subsided, and core inflation has remained low.... All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well anchored."
—March 2, 2005
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Monetary Policy report to Congress
"In the seven months since I last testified before this Committee, the U.S. economic expansion has firmed, overall inflation has subsided, and core inflation has remained low.... All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well anchored."
—February 16, 2005
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On Adam Smith
"In the broad sweep of history, it is ideas that matter. Indeed, the world is ruled by little else.... The short list of intellectuals who have materially advanced the betterment of civilization unquestionably includes Adam Smith. He is a towering contributor to the development of the modern world."
—February 6, 2005
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On the current account
"The voice of fiscal restraint, barely audible a year ago, has at least partially regained volume. If actions are taken to reduce federal government dissaving, pressures to borrow from abroad will presumably diminish."
—February 4, 2005
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2004

On oil
"The impact of the current surge in oil prices, though noticeable, is likely to prove less consequential to economic growth and inflation than in the 1970s....But, obviously, the risk of more serious negative consequences would intensify if oil prices were to move materially higher."
—October 15, 2004
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On monetary policy 25 years after October 1979
"In a democratic society such as ours, the central bank is entrusted by the Congress, and ultimately by the citizenry, with the tremendous responsibility of guarding the purchasing power of money. It is now generally recognized that price stability is a prerequisite for the efficient allocation of resources in our economy and, indeed, for fulfilling our ultimate mandate to promote maximum sustainable employment over time. But the importance of price stability has sometimes been insufficiently appreciated in our central bank's history, and such episodes have had unfortunate consequences."
—October 7, 2004
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On banking
"It would be a mistake to conclude... that the only way to succeed in banking is through ever-greater size and diversity. Indeed, better risk management may be the only truly necessary element of success in banking."
—October 5, 2004
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On the federal budget
"As you know, economic activity hit a soft patch in late spring after having grown briskly in the second half of 2003 and the first part of 2004. Consumer spending slowed materially, and employment gains moderated notably after the marked step-up in early spring. That softness in activity no doubt is related, in large measure, to this year's steep increase in energy prices."
—September 8 , 2004
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Monitary policy report to Congress
"With the growth of aggregate demand looking more sustainable and with employment expanding broadly, the considerable monetary accommodation put in place starting in 2001 is becoming increasingly unnecessary....But in light of the considerable uncertainty surrounding the anticipated evolution of price pressures, the FOMC emphasized that it will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."
—July 20, 2004
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At his nomination hearing
"The Federal Reserve's experiences over the past two decades make it clear that ...uncertainty is not just a pervasive feature of the monetary policy landscape; it is the defining characteristic of that landscape. As a consequence, the conduct of monetary policy in the United States has come to involve, at its core, crucial elements of risk management."
—June 15, 2004
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On economic developments
"The [FOMC] is of the view... that monetary policy accommodation can be removed at a pace that is likely to be measured. That conclusion is based on our current best judgment of how economic and financial forces will evolve in the months and quarters ahead. Should that judgment prove misplaced, however, the FOMC is prepared to do what is required to fulfill our obligations to achieve the maintenance of price stability so as to ensure maximum sustainable economic growth."
—June 8 , 2004
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On free markets
Free markets are the antithesis of violence. They rest not only on voluntary exchange but also on a necessary condition of voluntary exchange: trust in the word of those with whom we do business.
—May 21, 2004
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On financial literacy
"The world into which you graduate will require far greater conceptual skills than was required of your parents and grandparents. Productive and satisfying manual labor that engaged previous generations will become increasingly less available as technology substitutes for so many of those earlier skills. Your future incomes will depend on your conceptual abilities."
—May 13, 2004
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On globalization and innovation
"We may not be able to usefully determine at what point foreign accumulation of net claims on the United States will slow or even reverse, but it is evident that the greater the degree of international flexibility, the less the risk of a crisis. Should globalization continue unfettered and thereby create an ever more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption."
—May 6, 2004
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On energy
"Elevated long-term prices, if sustained, could alter the magnitude of and manner in which the United States consumes energy. Until recently, long-term expectations of oil and gas prices appeared benign….The recent shift in expectations, however, has been substantial enough and persistent enough to influence business investment decisions, especially for facilities that require large quantities of natural gas."
—April 27, 2004
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On the economic outlook
"The federal funds rate must rise at some point to prevent pressures on price inflation from eventually emerging. As yet, the protracted period of monetary accommodation has not fostered an environment in which broad-based inflation pressures appear to be building. But the Federal Reserve recognizes that sustained prosperity requires the maintenance of price stability and will act, as necessary, to ensure that outcome."
—April 21, 2004
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On the state of the banking industry
"The [banking] industry appears to have been sufficiently mindful of interest-rate cycles and not to have exposed itself to undue risk."
—April 20, 2004
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On capitalizing reputation
"Recent transgressions in financial markets have underscored the fact that one can hardly overstate the importance of reputation in a market economy....Even when followed to the letter, rules guide only a few of the day-to-day decisions required of business and financial managers. The rest are governed by whatever personal code of values that managers bring to the table."
—April 16, 2004
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On rural economic issues
"Today, our nation's farmers are highly dependent on exports to absorb their remarkable productivity.... However, foreign producers are adopting farming innovations rapidly as well, and efforts to increase the openness of world markets will need to be maintained and intensified so that the full benefits of farm productivity gains can raise standards of living worldwide."
—March 17, 2004
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On banking
"The banking system is in a strong and profitable position to finance the credit demands of the current expansion. As that expansion continues, both large and community banks will have to once again look beyond their core deposit base to fund those demands. The competitive environment for banks, especially community banks, will continue to intensify. Both history and current behavior suggest, however, that community banks can innovate and meet these competitive challenges."
—March 17, 2004
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On education
"Historically, we have placed much greater emphasis on the need to provide equality of opportunity than on equality of outcomes. But equal opportunity requires equal access to knowledge. We cannot expect everyone to be equally skilled. But we need to pursue equal access to knowledge to ensure that our economic system works at maximum efficiency and is perceived as just in its distribution of rewards."
—March 11, 2004
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On the current account
"The currency depreciation that we have experienced of late should eventually help to contain our current account deficit as foreign producers export less to the United States. On the other side of the ledger, the current account should improve as U.S. firms find the export market more receptive. But in the process, dollar prices of imports will surely rise."
—March 2, 2004
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On intellectual property rights
"Whether we protect intellectual property as an inalienable right or as a privilege vouchsafed by the sovereign, such protection inevitably entails making some choices that have crucial implications for the balance we strike between the interests of those who innovate and those who would benefit from innovation."
—February 27, 2004
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On the economic outlook and current fiscal issues
"In 2008—just four years from now—the first cohort of the baby-boom generation will reach 62, the earliest age at which Social Security retirement benefits may be claimed and the age at which about half of prospective beneficiaries choose to retire; in 2011, these individuals will reach 65 and will thus be eligible for Medicare....This dramatic demographic change is certain to place enormous demands on our nation's resources— demands we almost surely will be unable to meet unless action is taken. For a variety of reasons, that action is better taken as soon as possible."
—February 25, 2004
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On Government-Sponsored Enterprises (GSEs)
"GSEs need to be limited in the issuance of GSE debt and in the purchase of assets, both mortgages and nonmortgages, that they hold. Fannie [Mae] and Freddie [Mac] should be encouraged to continue to expand mortgage securitization, keeping mortgage markets deep and liquid while limiting the size of their portfolios. This action will allow the mortgage markets to support homeownership and homebuilding in a manner consistent with preserving the safe and sound financial markets of the United States."
—February 24, 2004
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On understanding household debt obligations
"Overall, the household sector seems to be in good shape, and much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress. And, in fact, during the past two years, debt service ratios have been stable."
—February 23, 2004
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On the critical role of education in the nation's economy.
"Protectionism will do little to create jobs; and if foreigners retaliate, we will surely lose jobs. We need instead to discover the means to enhance the skills of our workforce and to further open markets here and abroad to allow our workers to compete effectively in the global marketplace."
—February 20, 2004
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On economic flexibility
"What we in the United States do know is that, over the years, more than 94 percent of our workforce, on average, has been employed as markets matched idled workers seeking employment to new jobs. We can thus be confident that new jobs will displace old ones as they always have, but not without a high degree of pain for those caught in the job-losing segment of America's massive job-turnover process."
—January 26, 2004
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On globalization
"The costs of any new protectionist initiatives, in the context of wide current account imbalances, could significantly erode the flexibility of the global economy. Consequently, it is imperative that creeping protectionism be thwarted and reversed."
—January 13, 2004
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On risk and uncertainty in monetary policy
"Policymakers often have to act, or choose not to act, even though we may not fully understand the full range of possible outcomes, let alone each possible outcome's likelihood. As a result, risk management often involves significant judgment as we evaluate the risks of different events and the probability that our actions will alter those risks."
—January 3, 2004
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2003

Remarks before the World Affairs Council of Greater Dallas
"Vigorous economic competition over the years has produced a significant rise in the quality of life for the vast majority of the population in market-oriented economies, including those at the bottom of the income distribution."
—December 11, 2003
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Remarks before the 21st Annual Monetary Conference
"The costs of any new such protectionist initiatives, in the context of wide current account imbalances, could significantly erode the flexibility of the global economy. Consequently, it is imperative that creeping protectionism be thwarted and reversed."
—November 6, 2003
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Remarks before the Securities Industries Association
"If businesses are to spend and hire more vigorously, they will need to be convinced that economic growth can be sustained beyond the short run. One prominent concern is that, if the labor market remains weak, household confidence will suffer, with detrimental consequences for spending. Although layoffs seem to be diminishing, surveys indicate that households continue to be worried about the condition of labor markets."
—November 6, 2003
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Remarks before the Federal Reserve Payments System Development Committee Conference
"Continuing to meet the growth of electronic payment processing with highly reliable service is an obvious priority from a public-policy perspective. However, simply accommodating growth may not be sufficient, and consideration should also be given to meeting the changing needs of the users of these systems."
—October 29, 2003
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On financial education
"Let us remember that education is the primary means for creating new economic and financial opportunity for everyone. If we are able to boost our investment in people, ideas, and processes, just as we do in machines and technology, consumers and the economy can readily adapt to change, providing ever-rising standards of living for all Americans."
—September 26, 2003
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On monetary policy under risk
"Monetary policy based on risk management appears to be the most useful regime by which to conduct policy. The increasingly intricate economic and financial linkages in our global economy, in my judgment, compel such a conclusion."
—August 29, 2003
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Monetary policy report to Congress
"The FOMC stands prepared to maintain a highly accommodative stance of policy for as long as needed to promote satisfactory economic performance. In the judgment of the Committee, policy accommodation aimed at raising the growth of output, boosting the utilization of resources, and warding off unwelcome disinflation can be maintained for a considerable period without ultimately stoking inflationary pressures."
—July 15, 2003
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On natural gas supply
"We have been struggling to reach an agreeable tradeoff between environmental and energy concerns for decades. I do not doubt we will continue to fine-tune our areas of consensus. But it is essential that our policies be consistent."
—July 10, 2003
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On natural gas and demand issues
"Even with markedly less geopolitical instability confronting world gas than world oil in recent years, spot gas prices have been far more volatile than those for oil, doubtless reflecting, in part, less-developed global trade. The updrift and volatility of the spot price for gas have put significant segments of the North American gas-using industry in a weakened competitive position. Unless this competitive weakness is addressed, new investment in these technologies will flag."
—June 10, 2003
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On the economic outlook
"We have reached a point at which, in the judgment of the Federal Open Market Committee, the probability of an unwelcome substantial fall in inflation over the next few quarters, though minor, exceeds that of a pickup in inflation."
—May 21, 2003
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On corporate governance
"A market economy requires a structure of formal rules—a law of contracts, bankruptcy statutes, a code of shareholder rights—to name but a few. But rules cannot substitute for character. In virtually all transactions, whether with customers or with colleagues, we rely on the word of those with whom we do business."
—May 8, 2003
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Semiannual policy report to Congress
"Core prices by many measures have increased very slowly over the last six months. With price inflation already at a low level, substantial further disinflation would be an unwelcome development, especially to the extent it put pressure on profit margins and impeded the revival of business spending."
—April 30, 2003
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On market economies and rule of law
"Whether we protect intellectual property as an inalienable right or as a privilege vouchsafed by the sovereign, such protection inevitably entails making some choices that have crucial implications for the balance we strike between the interests of those who innovate and those who would benefit from innovation."
—April 4, 2003
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On financial education
"Regulators, consumer advocates, and policymakers all agree that consumer education is essential in the quest to stem the occurrence of abusive, and at times illegal, lending practices. An informed borrower is simply less vulnerable to fraud and abuse."
—April 3, 2003
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On community economic development
"We must embrace the challenge to develop objective and quantifiable standards to assess community development programs. Ultimately, such research is the only means for determining whether we are making advances in overcoming failures in distressed neighborhoods and improving access to economic opportunities for traditionally underserved populations."
—March 28, 2003 
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On global finance
"As international accounting and reporting standards become better, information asymmetries that currently exist between foreign and domestic investors will diminish."
—March 7, 2003
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On the home mortgage market
"Borrowing against home equity has been a staple of household finance for decades, but ... it has been only in the past decade or so that such practices have been encouraged by lenders. We need to far better understand the economics of this major addition to household finance and its impact on the economy."
—March 4, 2003
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On the aging global population
"The aging of the population is bound to bring with it many changes to our economy…. Early initiatives to address the economic effects of baby-boom retirements could smooth the transition to a new balance between workers and retirees. If we delay, the adjustments could be abrupt and painful."
—February 27, 2003
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On deposit insurance
"Raising the ceiling now would extend the safety net, increase the government subsidy to depository institutions, expand moral hazard, and reduce the incentive for market discipline without providing any clear public benefit. With no clear public benefit to increasing deposit insurance, the Board sees no reason to increase the scope of the safety net."
—February 26, 2003
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Monetary policy report to Congress
"To assume that productivity can continue to accelerate to rates well above the current underlying pace would be a stretch, even for our very dynamic economy. So, short of a major increase in immigration, economic growth cannot be safely counted upon to eliminate deficits and the difficult choices that will be required to restore fiscal discipline."
—February 11, 2003
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2002

On international risk management
"The inevitable rise in potential systemic risks as the international financial system inexorably expands can be contained by improvements in effective risk management in the private sector, improvements in domestic bank supervision and regulation, continued cooperation among financial authorities, and, should it be necessary, by central banks acting as lenders of last resort."
—November 19, 2002
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On the economic outlook
"Over the last few months...evidence has accumulated that the economy has hit a soft patch. Households have become more cautious in their purchases, while business spending has yet to show any substantial vigor. In financial markets, risk spreads on both investment-grade and non-investment-grade securities have widened. It was in this context that the Federal Open Market Committee further reduced our target federal funds rate last week."
—November 13, 2002
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The Wealth of Nations Revisited
"Modern economic analysis has confirmed much of what Adam Smith inferred from a far less impressive set of data. Today's economists generally point to three important characteristics influencing growth: (1) the extent of a country's openness to trade and its integration with the rest of the world, (2) the quality of a country's institutional infrastructure, and (3) the success of its policymakers in implementing the measures necessary for macroeconomic stability."
—November 12, 2002
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On education
"America's system of higher education has evolved into a highly diverse and complex range of institutions...all seeking their competitive advantage. What makes that system work effectively is that it has been influenced importantly by the values of a strong market economy—competition, risk-taking, and innovation."
—October 29, 2002
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On productivity
"At minimum...it seems reasonable to conclude that the step-up in the pace of structural productivity growth that occurred in the latter part of the 1990s has not, as yet, faltered."
—October 23, 2002
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On banking
"The greater potential for systemic risk can be contained by improvements in effective risk management in the private sector, including market discipline based on better public disclosure, and by improvements in bank supervision and regulation in the public sector. To be sure... there is some level of risk that must be absorbed, as a last resort, by central banks if an economy is to obtain the full resource allocation benefits of financial intermediation."
—October 7, 2002
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On regulation, innovation, and wealth creation
"Regulators may not always be able to differentiate easily between secrecy to protect intellectual property and secrecy to deceive or to commit outright fraud. Yet a supervisory system must make that distinction as best it can. There is nothing unusual about making difficult tradeoffs in regulation. In fact, it is the rule rather than the exception...."
—September 25, 2002
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At the opening of the new HM Treasury Building, London, U.K.
"History, together with London's long, should I say sterling, reputation as a place to do business, seems to have spurred market participants to continue to trade through London."
—September 25, 2002
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On current fiscal issues
"The framework enacted in the Budget Enforcement Act of 1990, and extended several times, must be preserved. Current budget projections remain relatively favorable, but those projections will be realized only under a disciplined approach to fiscal policy. Though undeniably difficult, following such a strategy will best prepare us for the fiscal pressures that will almost surely arise as the baby boom generation begins to retire."
—September 12, 2002
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On economic volatility
"It is by no means evident to us that we currently have-or will be able to find-a measure of equity premiums or related indicators that convincingly presage an emerging bubble. Short of such a measure, I find it difficult to conceive of an adequate degree of central bank certainty to justify the scale of preemptive tightening that would likely be necessary to neutralize a bubble."
—August 30, 2002
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Semiannual monetary to Congress
"The effects of the recent difficulties will linger for a bit longer but, as they wear off, and absent significant further adverse shocks, the U.S. economy is poised to resume a pattern of sustainable growth. Indeed, the central tendency of Federal Reserve policymakers' forecasts is for expansion of real GDP over the four quarters of 2002 of 3-1/2 to 3-3/4 percent....Inflation is expected to be subdued throughout."
—July 16 , 2002
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At the Conference on Bank Structure and Competition at the Federal Reserve Bank of Chicago
"The basic cause of procyclical bank lending is less the result of rules-regulatory or self imposed-and more our difficulty in predicting the future.... But [risk management] creates an analytical structure and enforces reference to past events and, in so doing, eliminates consideration of or suggests higher pricing for loans with a low probability of repayment. Enhanced risk management, by increasing our ability to focus better on probabilities, will tend to flatten cyclical lending patterns."
—May 10, 2002
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At the 2002 Financial Markets Conference of the Federal Reserve Bank of Atlanta
"The seemingly narrow accounting matter of option expensing is, in fact, critically important for the accurate representation of corporate performance. And accurate accounting, in turn, is central to the functioning of free-market capitalism—the system that has brought such a high level of prosperity to our country."
—May 3, 2002
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On federal deposit insurance reform
"The Board supports, with some modifications, all of the recommendations the FDIC made in the spring of 2001 except indexing the current $100,000 ceiling.... Raising the ceiling now would extend the safety net, increase the government subsidy to banking, expand moral hazard, and reduce the incentive for market discipline, without providing any real evident public benefits."
—April 23, 2002
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On monetary policy and the economic outlook
"The U.S. economy has displayed a remarkable resilience over the past six months in the face of some very significant adverse shocks.... Some of the forces that have weighed heavily on the economy over the past year or so have begun to dissipate, but other factors, such as the sharp increase in world oil prices, have arisen that pose new challenges. As a result, the course of final demand will need to be monitored closely."
—April 17, 2002
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On corporate governance
"We have to be careful... not to look to a significant expansion of regulation as the solution to current problems, especially as price-earnings ratios increasingly reflect the market's perception of the quality of accounting. Regulation has, over the years, proven only partially successful in dissuading individuals from playing with the rules of accounting."
—March 26, 2002
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On the U.S. economy
"The rate of saving—for retirement and other purposes—may not directly affect either the number of retirees or the size of the workforce. But it surely affects capital investment, which it finances, and the productivity that it engenders."
—March 13, 2002
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On monetary policy to the Congress
"The recent evidence increasingly suggests that an economic expansion is already well under way, although an array of influences unique to this business cycle seems likely to moderate its speed."
—March 7, 2002
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On saving for retirement
"The level of saving remains a key ingredient of economic growth. But we need also to know whether the source of that saving is sustainable, and beyond that, whether the type of financial assets in which our saving overall is accumulated affects our productivity."
—February 28, 2002
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On monetary policy to the Congress
"Despite the disruptions engendered by the terrorist attacks of September 11, the typical dynamics of the business cycle have re-emerged and are prompting a firming in economic activity. An array of influences unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery."
—February 27, 2002
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On financial literacy
"Improving basic financial education at the elementary and secondary school level is essential to providing a foundation for financial literacy that can help prevent younger people from making poor financial decisions that can take years to overcome.... Focusing on improving fundamental mathematic and problem-solving skills can develop knowledgeable consumers who can take full advantage of the sophisticated financial services offered in an ever-changing marketplace."
—February 5, 2002
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On the state of the economy
"It is clear that the U.S. economy went through a significant cyclical adjustment in 2001 that was exacerbated by the effects of the terrorist attacks on September 11.... But there have been signs recently that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm."
—January 24, 2002
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On the history of money
"If the evident recent success of fiat money regimes falters, we may have to go back to seashells or oxen as our medium of exchange. In that unlikely event, I trust, the discount window of the Federal Reserve Bank of New York will have an adequate inventory of oxen."
—January 16, 2002
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On the economy
"There are sound reasons for concluding that the long-run picture remains bright, and even recent signals about the current course of the economy have turned from unremittingly negative through the late fall of last year to a far more mixed set of signals recently. But I would emphasize that we continue to face significant risks in the near term."
—January 11, 2002
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2001

On the euro as an international currency
"To the extent that the capital flows we have observed from Europe to the United States are a critical piece of the story [of the euro], the future will be determined, at least in part, by the success in Europe of matching the expected rates of return on U.S. assets. But market pressures toward portfolio diversification are clearly also going to play a major role in the future relative positions of the dollar and the euro. The world can only benefit from the competition."
—November 30, 2001
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On energy supply
"The experience of the past fifty years-and indeed much longer than that-suggests the important role that can be played by market forces in conserving scarce energy resources, directing those resources to their highest valued uses, and ultimately ensuring adequate productive capacity for the future."
—November 13, 2001
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On the importance of financial education and literacy
"As market forces continue to expand the range of financial services, consumers will have more choice and flexibility in how they manage their financial matters, and they will demand education about use of the new technologies to make informed decisions."
—October 26, 2001
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On globalization
"Fear of terrorist acts...has the potential to induce disengagement from activities, both domestic and cross border. If we allow terrorism to undermine our freedom of action, we could reverse at least part of the palpable gains achieved by postwar globalization. It is incumbent upon us not to allow that to happen."
—October 24, 2001
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On the September 11 tragedy and the response of the financial industry
"We are blessed with a financial system that is creative, that is flexible, that is innovative. Banks—including the central bank—were there when they were needed and did what was required with dispatch. We should be proud of the banking system's role in minimizing the economic fallout of that tragic day."
—October 23, 2001
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On monetary policy and economic outlook
"The level of productivity will presumably undergo a one-time downward adjustment as our economy responds to higher levels of perceived risk. But once the adjustment is completed, productivity growth should resume at rates in excess of those that prevailed in the quarter-century preceding 1995."
—October 17, 2001
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On transparency in monetary policy
"Openness is more than just useful in shaping better economic performance. Openness is an obligation of a central bank in a free and democratic society. U.S. elected leaders chose to vest the responsibility for setting monetary policy in an independent entity, the Federal Reserve. Transparency of our activities is the means by which we make ourselves accountable to our fellow citizens to aid them in judging whether we are worthy of that task."
—October 11, 2001
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On the condition of the financial markets
"As we struggle to make sense of our profound loss and its immediate consequences for the economy, we must not lose sight of our longer-run prospects, which have not been significantly diminished by these terrible events."
—September 20, 2001
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Opening remarks at Fed symposium
"The influence of capital gains on economic behavior... is likely to be of substantial consequence for the prospective performance of the economy."
—August 31 , 2001
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Federal Reserve's semiannual report on monetary policy to the Congress.
"The period of sub-par economic performance, however, is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated,and require further policy response."
—July 18, 2001
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On the impact of energy on the economy
"National security and environmental concerns need to be addressed in setting [energy] policy. But those concerns should be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets."
—June 28, 2001
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On condition of the U.S. banking system
"This is a sea change—or at least the beginning of one. Formal risk-management systems are designed to reduce the potential for the unintended acceptance of risk and hence should reduce the pro-cyclical behavior that has characterized banking history. "
—June 20 , 2001
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On economic developments
"The period of sub-par economic growth is not yet over, and we are not free of the risk that economic weakness will be greater than currently anticipated, requiring