Regional President Speech

SK DRAFT (2} SILAS KEEHN REMARKS NATIONAL ASSOCIATION OF BANK WOMEN NOH1H SUBURBAN GROUP OCTOBER 18, 1984 I. INTRODUCTION -- WARM WORDS OF WELCOME A. PARTICULARLY PLEASED TO HAVE THIS OPPORTUNITY TO ADDRESS THE NATIONAL ASSOCIATION OF BANK WOMEN B. WOULD LIKE TO TALK WITH YOU ABOUT THE CHALLENGES AND CHANGES CURRENTLY FACING THE FEDERAL RESERVE SYSTEM 1. TO A VERY CONSIDERABLE EXTENT, VIRTUALLY EVERYTHING THE FEDERAL RESERVE DOES HAS A DIRECT OR AT LEAST INDIRECT EFFECT ON THE MARKETS, ON FINANCIAL INSTITUTIONS AND ON THE PUBLIC AT LARGE II. ADMITTING TO A BIAS, I WOULD LIKE TO SUGGEST THAT THE FEDERAL RESERVE PLAYS A KEY ROLE IN THE AFFAIRS OF OUR COUNTRY Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 2 A. TO UNDERSTAND HOW AND WHY WE DO CERTAIN THINGS, LET ME TALK A LITTLE BIT ABOUT HOW THE SYSTEM IS ORGANIZED B. DESCRIPTION - THE FEDERAL RESERVE SYSTEM: BANKS, BRANCHES, GEOGRAPHIC, ET AL 1. tACH BANK A GOVERNMENT CORPORATION -- SEPARATE A. BOARD OF DIRECTORS -- 9 B. 3 CLASSES -- THE ELECTIVE PROCESS 2. BOARD OF GOVERNORS -- 7: 14 YEAR STAGGERED TERMS A. APPOINTMENT/CONFIRMATION PROCESS B. CHAIRMAN/VICE CHAIRMAN 3. INTERRELATIONSHIP BETWEEN THE BOARD OF GOVERNORS AND BANKS A. GOVERNANCE RESPONSIBILITY OF INDIVIDUAL RESERVE BANK BOARDS OF DIRECTORS (1) QUITE DIFFERENT THAN A REGULAR COMMERCIAL BANK B. OPERATIONAL AND PROCEDURAL CONTROLS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 3 C. CHECKS AND BALANCES (1) REALLY THE REASON FOR MY TAKING TIME TO DESCRIBE THE SYSTEM (2) THE EXCEPTIONAL IMPORTANCE -- CENTRAL BANK -- MONETARY POLICY (3) ALMOST UNIQUELY EFFECTIVE (4) AS I WILL POINT OUT LATER, WE COULD BE FACING A PERIOD WHERE THIS WILL BECOME CRITICALLY IMPORTANT 111. THE FUNCTIONS OF THE FEDERAL RESERVE BANKS A. MONETARY POLICY 1. THE NO. 1 RESPONSIBILITY OF ABSOLUTELY OVERRIDING IMPORTANCE A. ALL OF OUR ACTIVITIES -- VIRTUALLY EVERYTHING WE DO -- AT LEAST TANGENTIALLY RELATED TO THIS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 4 B. SUPERVISION AND REGULATION 1. THE DEVELOPMENT OF RULES BY WHICH FINANCIAL INSTITUTIONS ARE GOVERNED AND CONTROLLED 2. THE ENFORCEMENT OF THESE REGULATIONS AS THEY RELATE TO THE INSTITUTIONS C. OPERATIONS 1. THE ROLE OF THE FEDERAL RESERVE BANKS IN THE PAYMENTS MECHANISM -- OUR BASIC OPERATIONS D. FOR SEPARATE AND DIFFERENT REASONS, EACH OF THESE AREAS OF ACTIVITY 1. GOING THROUGH A PERIOD OF SIGNIFICANT CHANGE 2. THOUGH SEPARATE, NONETHELESS INTERRELATED 3. ULTIMATELY RELATE BACK TO MONETARY POLICY lV. LET ME START WITH OUR OPERATIONS A. I WILL USE A CURRENT ISSUE, NAMELY, ELECTRONIC FUND TRANSFER -- THE WHOLE EFl AREA -- AS AN EXAMPLE OF Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 5 HOW ULTIMATELY THIS RELATES TO MONETARY POLICY B. AS MANY OF YOU ARE AWARE, WE ARE INCREASINGLY FOCUSING ON THE EFl AREA AS ONE BEARING SPECIAL CONCERN C. BECAUSE WE OPERATE THE FEDWIRE, WHICH IS DIRECTLY COMPETITIVE WITH SEVERAL PRIVATE SECTOR NETWORKS 1. THERE IS THE IMPRESSION THAT WE ARE ATTEMPTING TO EXPAND OUR PRESENCE -- TURF D. RATHER, WE HAVE BECOME INCREASINGLY CONCERNED ABOUT THE RISKS INHERENT IN THE WHOLE WIRE AREA, PARTICULARLY THE PRIVATELY OWNED/OPERATED NETWORKS, AND THE DESTABILIZING EFFECT THAT A SIGNIFICANT FAILURE COULD HAVE ON OUR FINANCIAL MARKETS E. IF A MAJOR INSTITUTION FAILED OR WAS IN SOME WAY UNABLE TO SETTLE ITS POSITION DURING THE DAY OR AT THE END OF THE DAY, A DOMINO EFFECT COULD OCCUR F. OUR ONLY RECOURSE WOULD BE TO LIQUEFY THE SYSTEM Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 6 G. OBVIOUS MONETARY POLICY IMPLICATIONS H. MCA -- ENORMOUS CHANGE IN OUR APPROACH TO BASIC OPERATIONS 1. SHIFT FROM BENIGN SUPPLIER OF SERVICES AT NO CHARGE 2. TO A COMPETITIVE PARTICIPANT IN A VERY DYNAMIC MARKET 3. THE RESERVE BANKS HAVE MADE THIS CONVERSION 4. VOLUME EXPERIENCE AND OUTLOOK A. fOR THE FIRST 6 MONTHS OF THIS YEAR, THE BANKS, ON A CONSOLIDATED BASIS, SAW THEIR SERVICES PROFITABLE B. THERE HAS BEEN A MEETING OF THE MINDS ON THIS DIFFICULT ISSUE 1. OUR ROLE MISUNDERSTOOD BY THE PRIVATE SECTOR Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 7 1. GOVERNMENT ENTITY COMPETING WITH THE PRIVATE SECTOR 2. BUT THE RISKS ARE SIGNIFICANT A. DIFFICULT TO MAINTAIN A PRESENCE WITHOUT FINANCIAL SUCCESS 3. IF WE ARE NOT SUCCESSFUL, OUR ROLE IN THE PAYMENTS MECHANISM WILL NOT BE VIABLE A. PAYMENTS MECHANISM -- PIPELINE 4. THE POTENTIAL RISKS IN HAVING THE FED CEASE ITS PRESENCE ARE VERY SIGNIFICANT A. EVEN OUR HARSHEST CRITICS WOULD NOT WANT THAT J. ADMIT THE CONTRADICTION 1. BUT THE LAW HAS SPECIFICALLY PLACED US IN THE CONTRADICTORY ROLE SECOND AREA V. SUPERVISION AND REGULATION -- THE FINANCIAL SERVICE INDUSTRY IS UNDERGOING A SIGNIFICANT ENVIRONMENTAL CHANGE Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 8 A. MARKETPLACE CHANGES MOVING FORWARD FAR MORE RAPIDLY THAN THE REGULATORY CHANGES 1. ONLY JUST BEGINNING TO SEE THE IMPACT OF THIS 2. THE EXAMPLES OF OTHER INDUSTRIES THAT HAVE GONE THROUGH DEREGULATION ARE INSTRUCTIVE 3. BANKING WILL BE NO DIFFERENT B. THE OVER-CAPACITY CONCEPT 1. REGULATION HAS PROVIDED SUPPORT TO A GREATER NUMBER OF INSTITUTIONS THAN NATURAL MARKET FORCES WOULD HAVE PERMITTED A. DEREGULATION WILL EXPOSE ALL INSTITUTIONS TO MARKET CONDITIONS THAT THEY HAVE NEVER EXPERIENCED BEFORE 2. DEREGULATION MUST RESULT IN THE CONSOLIDATION AND REDUCTION IN NUMBER OF INSTITUTIONS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 9 A. THE INEFFICIENT, NON-COMPETITIVE INSTITUTIONS WILL NOT SURVIVE BUT WELL MANAGED INSTITUTIONS OF ALL SIZES WILL DO JUST FINE B. BY NO MEANS THE DEMISE OF SMALL, INDEPENDENT BANKS C. EXAMPLES OF STATES THAT ALLOW STATEWIDE BANKING ARE INSTRUCTIVE D. NEW CHARTERS GRANTED IN RECORD NUMBERS D. CLEARLY, THESE CHANGES TOUCH ON THE SAFETY AND SOUNDNESS ISSUE 1. FAILURES THAT DESTABILIZE FINANCIAL CONDITIONS HAVE AN IMPACT ON MONETARY POLICY 2. THEREFORE, WE MUST HAVE A REGULATORY PRESENCE WITH THE MAJOR INSTITUTIONS WHERE THE IMPACT WOULD BE FELT Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 10 THIRD AR~A VI. tCONOMIC RESEARCH AND MONETARY POLICY A. THE BASIC OPERATING CHANGE IN OCTOBER 1979 1. INFLATION 2. THE CONSIDERABLE ACHIEVEMENTS IN THIS AREA B. OUR BASIC TOOLS FOR MONETARY POLICY -- THE AGGREGATES OR THE M S 1 1. HAVE BEEN UNDERGOING SIGNIFICANT CHANGE 2. INNOVATIONS IN FINANCIAL SERVICES -- NOW ACCOUNTS, MMDA'S, ETC C. THE CURRENT CHALLENGE 1. TO MAINTAIN THE PROGRAM -- PRICE STABILITY -- YET BE FLEXIBLE IN THE APPROACH 2. AN INCREASINGLY DIFFICULT OBJECTIVE IN A HOSTILE FISCAL POLICY ENVIRONMENT Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 11 D. THE CURRENT STATUS OF THE ECONOMY 1. THE GOOD NEWS IS BECOMING OLD NEWS 2. NOW IN THE 23RD MONTH OF RECOVERY/EXPANSION 3. CURRENT INDICATIONS -- SLOWDOWN A. MORE SUSTAINABLE RATE OF GROWTH B. EXPECTATION THAT THIS WILL CONTINUE FOR THIS YEAR AND THROUGH NEXT YEAR (1) DO NOT ANTICIPATE A RENEWED RECESSION C. TURNS IN THE ECONOMY ARE VERY HARD TO CALL (1) WE ARE IN A PERIOD THAT IT WILL BE PARTICULARLY IMPORTANT TO FOLLOW THE DATA VII. THOUGH WE HAVE A POSITIVE OUTLOOK REGARDING THE ECONOMIC FORECAST -- EUPHORIA -- RISKS OF A SIZE AND DIMENSION AT THIS POINT BEING CONTROLLED EIKSJ A. RESURGENCE OF INFLATION Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 12 1. WAGE RISKS A. RECENT EXPERIENCE -- SETTLEMENT B. PRODUCTIVITY GAINS IMPRESSIVE 2. PRICE ESCALATION A. CAPACITY UTILIZATION B. COMPETITIVE MARKET CONDITIONS SECOND B. DOMESTIC FINANCIAL STRAINS 1. THE CURRENT ENVIRONMENT ONE OF UNCERTAINTY 2. MARKETS HAVE BEEN IN A SOMEWHAT EXTENDED POSITION ELECTRIC 3. AN UNEXPECTED DEVELOPMENT COULD HAVE ADVERSE EFFECTS THIRD C. THE ENTIRE INTERNATIONAL AREA, WHICH, IN TURN, DIVIDES INTO 3 SEPARATE AND SIGNIFICANT CATEGORIES Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 13 1. THE EXTERNAL DEBTS OF THE LDC COUNTRIES A. SHOWING SOME IMPROVEMENT -- THE FUNDAMENTALS IN MANY COUNTRIES ARE SIGNIFICANTLY BETTER B. FOR THE LONG RUN, A CONTINUED WORLDWIDE RECOVERY IS THE BEST, PERHAPS THE ONLY, SOLUTION C. THOUGH CONTROLLABLE, THIS IS A VERY SERIOUS PROBLEM, WE HAVE A LONG WAY TO GO, ONE THAT COULD CAUSE SIGNIFICANT REPERCUSSIONS FOR THE WORLDWIDE MARKETS 2. OUR GROWING TRADE DEFICIT A. ALL LOGIC WOULD SUGGEST THAT IT IS INCREASING AT AN UNSUSTAINABLE RATE B. HEADING TOWARD AN ANNUAL RATE RISING TO $130 BILLION Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 14 C. POSITIVE IMPACT ON INFLATION BUT VERY, VERY ADVERSE FOR EXPORTING INDUSTRIES SO IMPORTANT TO THE MIDWEST 3. EXCHANGE RATES A. VIRTUALLY EVERYONE (EXCEPT THE MARKETS WHERE IT REALLY MATTERS) HAS BEEN EXPECTING A DECLINE IN THE VALUE OF THE DOLLAR B. HUT OUR HIGH INTEREST RATES, LOW LEVELS OF INFLATION, GOOD ECONOMIC CONDITIONS AND SOLID POLITICAL SYSTEM MAKE THE DOLLAR ATTRACTIVE C. BUT MARKETS CAN CHANGE AND WITH LIGHTNING-LIKE SPEED (1) IF THIS TURNS AROUND (2) PARTICULARLY IF THE CHANGE IS RAPID AND IN A SIGNIFICANT AMOUNT (3) IT COULD HAVE A VERY SERIOUS EFFECT Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 15 VIII. BUT THE LARGEST RISK BY FAR IS THE CONTINUING AND GROWING FISCAL DEFICIT A. THE PUBLICITY -- PARTICULARLY DURING THE PAST FEW WEEKS -- I ALMOST DARE NOT MENTION IT 1. BUT THERE IS GROWING AGREEMENT THAT THIS IS OUR MOST SERIOUS RISK 2. OUR TRADE DEFICIT IS CURRENTLY MASKING SOME OF THE IMPACT OF THE FISCAL DEFICIT A. TO A VERY SIGNIFICANT EXTENT, THE FOREIGN MARKETS ARE FINANCING OUR DOMESTIC DEFICIT B. IF FOREIGN MARKET SENTIMENT REVERSES, IT Will ESCALATE DOMESTIC EFFECT OF THE DEFICIT RAPIDLY AND SIGNIFICANTLY C. lHE RESULT WOULD BE HIGHER LEVELS OF INTEREST RATES Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 16 (1) VERY NEGATIVE IMPACT ON OUR ECONOMIC RECOVERY (2) SERIOUS EFFECT ON THE WORLDWIDE ECONOMIC SITUATION (3) EXACERBATE SOME OF THE RISKS THAT I HAVE PREVIOUSLY ENUMERATED B. 1 HE DEFICIT IS A TICKING TIME BOMB 1. cVERYONE AGREES THAT IT MUST BE REDUCED 2. NO ONE HAS A HALFWAY REASONABLE PROGRAM FOR ACCOMPLISHING THIS C. l"HE DISCUSSION IS LARGELY IN THE FORM OF POLITICAL RHETORIC -- AN UNREAL TONE -- LACKS PRACTICALITY 1. I REALLY DON'T THINK WE TAKE THE PROBLEM SERIOUSLY A. 1·HERE MAY WELL BE A GOOD REASON -- AFTER All, THINGS ARE GOING REASONABLY WELL B. WE TEND TO BE CRISIS ORIENTED -- WE WILL ACT WHEN THE CRISIS ARISES Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 17 C. THAT TIME COULD WELL BE APPROACHING D. UNTIL THEN. l'M NOT SURE THAT WE ARE WILLING TO MAKE THE HARD CHOICES NECESSARY (1) OUR TRACK RECORD SO FAR IS NOT VERY GOOD D. BUT TIME IS RUNNING PERILOUSLY SHORT 1. ~ARLIER IN THE ECONOMIC UPTURN THERE WAS VERY LITTLE PRIVATE INVESTMENT 2. APPROPRIATIONS FOR CAPITAL EXPENDITURES HAVE BEEN INCREASING A. HUT MAY BE SLOWING DOWN B. THE DEFICIT ISSUE MAY ALREADY HAVE HAD AN IMPACT 3. PRIVATE CREDIT DEMANDS HAVE BEEN VERY POWERFUL 4. IF FOREIGN MARKETS DO CHANGE AND STOP PROVIDING CAPITAL TO OUR MARKETS A. WATCH OUT! Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFl (2) 10/17/84 PAGE 18 IX. A REAL DANGER -- THE COMPOUND INTEREST SYNDROME A. DEFICITS RESULT IN DEBT 1. CURRENT LEVEL ABOUT $1.5 TRILLION -- AT THE CURRENT RATE THE LEVEL IS RISING BY SOME $4.5 BILLION PER WEEK 2. OR SOME $900 MILLION EACH AND EVERY WORKING DAY B. IT TOOK OUR COUNTRY JUST 200 YEARS TO REACH A DEBT LEVEL OF $500 BILLION 1. JUST 5 MORE YEARS TO DOUBLE THAT TO $1 TRILLION 2. AND NOW1 NOT YET MIDWAY IN THE CURRENT DECADE1 WE HAVE HAD YET ANOTHER $500 BILLION TO REACH THE $1.5 TRILLION LEVEL A. THE RATE OF ESCALATION PRETTY FRIGHTENING 3. THE INTEREST COST OF SUPPORTING THIS BURGEONING DEBT HAS OMINOUS IMPLICATIONS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 19 A. CURRENTLY SOME 3% OF OUR GNP IS COMMITTED TO INTEREST PAYMENTS -- $110 BILLION IN THE FISCAL YEAR JUST COMPLETED 4. BUT ESTIMATES BY THE CONGRESSIONAL BUDGET OFFICE THROUGH THE END OF THE DECADE SHOW INTEREST RISING TO 4% OF THE GNP BY THE END OF THE DECADE AND ALMOST 10% OF THE GNP BY THE END OF THIS CENTURY -- NOT LIGHT YEARS AWAY A. THIS FORECAST WOULD SUGGEST THAT INTEREST PAYMENTS AT THE END OF THE CENTURY WOULD AMOUNT TO SOME $1 TRILLION PER YEAR X. ANY REASONABLE ANALYSIS OF THE PROBLEM WOULD SUGGEST THAT WE CANNOT ALLOW THIS TO HAPPEN A. AS BUSINESS MANAGERS, YOU WOULD NOT LOOK AT THESE KINDS OF FORECASTS AND NOT TAKE CORRECTIVE ACTION B. NOR AS A PEOPLE CAN WE ALLOW IT TO HAPPEN Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 20 C. NOT INCIDENTALLY, IT WOULD BE EXCEPTIONALLY DIFFICULT TO DEVELOP A VIABLE MONETARY POLICY IN SUCH AN ADVERSE FISCAL ENVIRONMENT 1. THERE SIMPLY MUST BE SOME REASONABLE BALANCE IN ORDER TO MAINTAIN OUR CURRENT POLICY OF CONTROLLING INFLATION AND RETURNING THE ECONOMY TO CONDITIONS OF PRICE STABILITY 2. FISCAL/MONETARY POLICY SIMPLY CANNOT BE MOVING IN DIAMETRICALLY OPPOSED DIRECTIONS D. BUT A MUCH LONGER RANGE VIEW OF THIS PROBLEM CAN BE QUITE ENCOURAGING 1. LOOKING AT THE ENTIRE HISTORY OF OUR COUNTRY 2. THIS DEFICIT/DEBT PROBLEM IS ONE THAT WE HAVE FREQUENTLY FACED AND IN EACH AND EVERY INSTANCE WE HAVE SOLVED IT E. LET ME QUICKLY REVIEW THE HISTORICAL RECORD Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 21 1. OUR DEFICITS HAVE BEEN EVENT-ORIENTED -- CAUSED BY A WAR, A PANIC, AN ECONOMIC RECESSION -- OR SOME SIMILAR EVENT, WHICH OBVIOUSLY SHOULD BE DEALT WITH BY RUNNING A DEFICIT 2. BUT AFTER THE EVENT, WE HAVE RUN BUDGETARY SURPLUSES AND WE HAVE REDUCED OR ELIMINATED THE DEBT 3. THIS RECORD HOLDS FOR THE REVOLUTIONARY WAR, THE WAR OF 1812, THE CIVIL WAR, WWI AND ALL OTHER EVENTS RIGHT UP THROUGH THE IMMEDIATE POST WWII PERIOD 4. IN THE 14 YEARS FROM 1947 THROUGH 1960 THERE WERE 7 FISCAL DEFICITS AND 7 SURPLUSES ~- HUT SINCE 1960 THERE HAS BEEN ONLY ONE SURPLUS YEAR, 1969, AND THAT WAS ONLY $3 BILLION A. WHEN THE HISTORIANS LOOK BACK AT THE RECORD, 1960 MAY BE TURNING POINT IN THIS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 22 f. WE SEEM TO HAVE ENTERED A NEW PHASE IN OUR HISTORY 1. WE SEEM TO BE WILLING TO EXPERIENCE DEFICITS AND INCREASE DEBT TO SUPPORT OUR NORMAL ACTIVITIES -- DEFICITS ARE NOT EVENT RELATED 2. lHIS INVOLVES A SIGNIFICANT PHILOSOPHICAL CHANGE IN THE MANAGEMENT OF OUR AFFAIRS G. MY REASON FOR GOING THROUGH THIS HISTORY IS TO SIMPLY EMPHASIZE THE POINT THAT OVER THE LONG SPAN OF YEARS 1. AS A NATION1 WE HAVE RUN BUDGETARY SURPLUSES -- IT CAN BE DONE 2. WE HAVE BEEN ABLE TO SIGNIFICANTLY REDUCE THE LEVEL OF OUTSTANDING DEBT -- THERE ARE FREQUENT EXAMPLES IN THE RECORD 3. lHIS HISTORICAL PRECEDENT GIVES ME CONFIDENCE THAT WE CAN REVERSE BUDGETARY DEFICITS WITH SURPLUSES Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 23 4. I CANNOT IMAGINE OUR COUNTRY ALLOWING THESE TRENDS TO CONTINUE AND TO FALL INTO THE STATUS THAT EXTERNAL FORCES, EITHER INTERNATIONAL MARKETS OR, EVEN MORE DRACONIANLY, THE INTERNATIONAL MONETARY FUND, WOULD HAVE THE RIGHT TO MAKE OUR DECISIONS FOR US -- GUIDE OUR DESTINY 5. I AM OPTIMISTIC THAT WE WILL NOT ALLOW THIS TO HAPPEN XI. CONCLUSION A. EXCITING TIME TO BE AFFILIATED WITH THE FEDERAL RESERVE 1. A LOT GOING ON B. lHE ECONOMY HAS COME THROUGH A DIFFICULT PERIOD WITH GREAT SUCCESS C. THE MAJOR CHALLENGE -- THE FISCAL DEFICIT 1. NOT JUST AN ECONOMIC OR MONETARY POLICY ISSUE 2. A DEEP SOCIAL AND PHILOSOPHICAL ISSUE Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis SK DRAFT (2) 10/17/84 PAGE 24 3. BUT ONE I KNOW WE, AS A NATION, WILL ADDRESS SUCCESSFULLY D. THANK YOU FOR THE OPPORTUNITY TO SPEAK WITH YOU THIS EVENING * * * * * * Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis

Silas Keehn (1984, October 17). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19841018_silas_keehn

@misc{wtfs_regional_speeche_19841018_silas_keehn,
  author = {Silas Keehn},
  title = {Regional President Speech},
  year = {1984},
  month = {Oct},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19841018_silas_keehn},
  note = {Retrieved via When the Fed Speaks corpus}
}