trip investment curbed the incentive to accumulate shortterm assets. of course, freely flowing capital brings costs along with benefits. the short - term nature of capital flows implies that their direction can reverse quickly, sometimes with quite disturbing consequences. as opposed to the 19th century, we have mechanisms to help cushion the effects of crises and a willingness to change national monetary policies when the need arises. the role of policy as with our great grandparents, our own economies are made better by our interaction with the wider world around us. international trade in goods, services, and assets are the chief means of facilitating that interaction. and those interactions and connections in recent decades have become stronger. to some extent, we can credit good national policy making for this. the progress in lowering trade barriers since world war ii marks the triumph of putting an important idea into practice - that international trade benefits all nations. indeed, in every nation, those benefits are shared by people spread across quite different income brackets. the pity is that this idea has been well known in the economics profession for the two past centuries. to be sure, some of this recent progress was bred by necessity, as national governments came to appreciate the patent inevitability of globalization. by lowering the costs of transacting and sharing information, technology has reduced market frictions and provided significant impetus to the process of broadening world markets. expanding markets, in turn, have increased competition and narrowed the ability of governments to influence economic outcomes. in recognition both of the prosperity possible through an open trading system and of their lessened ability to halt that tide, many governments have reduced tariffs and trade barriers and, when necessary, deregulated markets. these actions themselves have further promoted globalization. the risks we face understanding the process by which this progress has been accomplished highlights a critical risk going forward. simply put, good economic performance has made it easier to make good economic policy. however, any notable shortfall in economic performance from the exemplary standard of recent years runs the risk of reviving mistrust of market - oriented systems, even among conventional policymakers. thankfully, such views are not widespread, and most fall quickly to the force of reason. still, the arguments against the global trading system that emerged first in seattle and then spread over the past year arguably touched a chord in many people, in part by raising the fear that they would lose local political control of their destinies. as some analysts have noted, protests have arisen not against “ economic forums ” per

has purchased about $ 250 billion of commercial paper, allowing many firms to extend significant amounts of funding into next year. a third facility, expected to be operational next week, will provide a liquidity backstop directly to money market mutual funds. this facility is intended to give funds confidence to extend significantly the maturities of their investments and reduce over time the reliance of issuers on sales to the federal reserve's special - purpose vehicle. all of these programs, which were created under section 13 ( 3 ) of the federal reserve act, must be terminated when conditions in financial markets are determined by the federal reserve to no longer be unusual and exigent. the primary objective of these and other actions we have taken is to stabilize credit markets and to improve the access to credit of businesses and households. there are some signs that credit markets, while still quite strained, are improving. interbank short - term funding rates have fallen notably since mid - october, and we are seeing greater stability in money market mutual funds and in the commercial paper market. interest rates on higher - rated bonds issued by corporations and municipalities have fallen somewhat, and bond issuance for these entities rose a bit in recent weeks. the ongoing capital injections under the tarp are continuing to bring stability to the banking system and have reduced some of the pressure on banks to deleverage, two critical first steps toward restarting flows of new credit. however, overall, credit conditions are still far from normal, with risk spreads remaining very elevated and banks reporting that they continued to tighten lending standards through october. there has been little or no bond issuance by lower - rated corporations or securitization of consumer loans in recent weeks. to help address the tightness of credit, on november 12 the federal banking agencies issued a joint statement on meeting the needs of creditworthy borrowers. the statement took note of the recent strong policy actions designed to promote financial stability and improve banks'access to capital and funding. in light of those actions, which have increased the capacity of banks to lend, it is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met in a manner consistent with safety and soundness. as capital adequacy is critical in determining a banking organization's ability and willingness to lend, the joint statement emphasizes the need for careful capital planning, including setting appropriate dividend policies. the statement also notes the agencies'expectation that banking organizations should work with existing borrowers