economic activity has depended on two - way foreign trade. even for the small settler communities at the end of the earth 150 years ago, it never made sense to attempt to self - sufficiently meet all their own material needs. self - sufficiency makes so much less sense today, if we value prosperity and opportunity at all. with all due respect to the christchurch technology sector, and i have a great deal of respect for it, think of the inefficiency and waste involved if we ’ d had to develop and maintain our own microsoft, meeting only new zealand needs, our own boeing, our own vodafone. and equally, the prospects for our own innovators – tait electronics or aoraki corporation, say – would have been bleak had they been limited to new zealand sales alone. as a nation, we turned inwards in the late 1930s, taking the protectionist route to development. the advocates of that change were unquestionably well - motivated. they too recognised that in the longrun agriculture was unlikely to sustain first - world living standards and strong growth. but equally clearly it was a wrong turning that delayed our adjustment, our shift to a high - tech globally - integrated economy, by several decades. we pay the price for that now, in at least two ways. first, our economy and people are less able to take advantage of the opportunities that beckon this decade than we might have been if we ’ d avoided the by - ways of protection. but, second, we face the very real human and social costs of adjusting away from the industry structures which the protective policies of the 1930s onwards bequeathed us. there are no easy answers to the practical questions of just how fast we should move away from that protectionist route. much of the work has already been done, even though the current government and its predecessor have answered slightly differently the questions about the protective barriers that remain. trade matters – it is simply vital to our future – but i believe there is also a strong recognition of the need to bring people along. speaking only a couple of weeks ago of the changes new technology is bringing about in the us, alan greenspan – himself an enthusiastic advocate of the market economy – noted : but as we seek to manage what is now this increasingly palpable historic change in the way businesses and workers create value, our nation needs to address the associated dislocations that emerge, especially among workers who see the security of their jobs and their lives threatened.

we do it. then i ’ ll give you my views on the economy nationally and locally. it ’ s a serious issue because it affects your family and students ’ job prospects at graduation time. what the new york fed does by way of introduction, i will briefly review what the new york fed does and what makes my job so interesting. as always, what i have to say reflects my own views and not necessarily those of the federal reserve system or the federal open market committee, also known as the fomc. i am vice chair of the fomc – a federal reserve committee that meets eight times a year in washington to set interest rates and make other decisions about monetary policy. the members of this committee all strive to set policy to advance the mandate given to us by congress to promote the maximum level of employment consistent with price stability. sometimes we have different views on the specific policy choice on hand, and you should view this as completely appropriate : these are hard questions – particularly at times like this – and we make better decisions as a committee because we don ’ t all think alike. but we are united in our commitment to our mandate and in our belief that fed independence is essential bis central bankers ’ speeches to the public interest, because it allows us to take tough decisions insulated from short - term political pressures. at fomc meetings, each committee member presents a current outlook for his or her region and the nation. for these assessments, we consult our researchers and add critical information that we learn from listening to our boards of directors, regional advisory councils and community leaders, such as you and others i ’ ll meet on this visit. this trip includes meetings with the people at the suny nanotech center, global foundries ( an advanced microprocessor plant ), the capital region economic development council, and the rensselaer polytechnic institute. at the new york fed, we continually track conditions in our district, and we have created a number of tools for that purpose. for example, my staff produces monthly indexes of economic activity for new york city, new jersey and new york state. these indexes are essentially local measures of output – similar to gross domestic product, or gdp at the national level. these measures provide a more complete gauge of activity than the employment report, which is the only other available metric at the state level. we have also started a consumer panel to track local household credit conditions, including the amount and type of debt owed by an average person and whether