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Sandra Pianalto, Cleveland Fed President, on Artificially Low Interest Rates, 2008

Sandra Pianalto, Cleveland Fed President, on Artificially Low Interest Rates Sandra Pianalto, President and CEO of the Federal Reserve Bank of Cleveland. Speech, Q & A to City Club of Cleveland, November 14, 2008.

----- Timeline -----
0:00 Q: What affect do you think lowering [Fed] interest rates over the last several years to historic lows had...?

2:36 Q: It might have been the artificial expansion of credit following the Dot Com bust was the true root cause of this crazy housing speculation. It credit were not so cheap, investors might not have been so foolish. So my question to you is, "When you are meeting with the Federal Open Market Committee, weighing the pros & cons of altering interest rates, do you ever consider the possibility that no man or women will ever be intelligent enough to guess correctly what the price of money should be? And that it might be wise to let the free market determine how much liquidity is in circulation?

3:20 A: The umm. Ya know. Our role is... is umm, ah, umm. The Federal Reserve is, umm ah. We have... Umm er... We have a dual mandate. Umm. And that is to make sure that prices arestable. Umm. Price stability mandate. And umm... to umm, to provide an environment where the ec... economy can grow...

4:20 (Restating the question, lest we forget): ... Your question, 'Is anyone smart enough to set the price of various assets including money?' No. That is why the marketplace does work.

4:50 "... we've provided too much inflation."

5:25 Our [Federal Reserve] role is to provide an environment where the marketplace can make the decisions on what the prices of those goods & service should be [except money].

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