became the basis for the green revolution that he started in mexico and that ended up feeding billions of people around the world. well, i think by now you know that the boy i ’ m speaking of is me. i may be the only central banker on the planet whose little league baseball coach went on to win the nobel peace prize! my fondest childhood memories are from mexico. small wonder that i delighted when president clinton asked me to become deputy u. s. trade representative and help implement nafta – even if it meant matching wits with formidable negotiators like luis de la calle and herminio blanco! small wonder that as president of the federal reserve bank of dallas, i have delighted in working closely with guillermo ortiz and agustin carstens. small wonder that at meetings of the federal open market committee or in u. s. banking circles, i have often argued mexico ’ s case. or taken sheer pleasure in pointing out to u. s. congressmen and senators, and in speeches and media interviews, that the mexican government – unlike my own government – actually can agree on a budget, keep deficits under control, bring about structural change and resist interfering with the workings of an independent central bank. bis central bankers ’ speeches i am full of pride for mexico. i am full of pride that this country, the country of my happiest childhood years, would now choose to honor me with the order of the aztec eagle. the citation for this honor speaks of my being a fierce defender of price stability. in the parlance of central banking, i am referred to as a “ hawk. ” well, it may not surprise you to learn that taxonomists place the eagle and the hawk in the same bird family. so, secretary meade, secretary videgaray and dear friend agustin, i accept this thoughtful honor from the president of the country i love so much with hawkish pride and close kinship to the golden eagle that is the symbol of mexico. ¡ viva mexico! thank you. bis central bankers ’ speeches

with surplus cash. the s & p closed yesterday at 1, 819, the nasdaq at 4, 113 and the dow at 16, 258 – a plateau over two times above the valley into which they had descended in 2009. and, again, there are the signs of conspicuous consumption i mentioned earlier that reflect a fully robust stock market. if there is indeed a wealth effect that spreads from clever market operators to the working people of america, a $ 2 trillion balance sheet might well have been sufficient to have performed the trick. the fomc is a committee, however, and the majority of my colleagues have disagreed with me on this point. we have since doubled our balance sheet to $ 4 trillion. this has resulted not only in saltatory4 housing, bond and stock markets, but a real economy that is on the mend, with cyclical unemployment declining and inflation thus far held at bay. liquidity swaps continued to fall after march, hitting zero in february 2010. merriam - webster ’ s dictionary defines saltatory as “ of or relating to dancing ; proceeding by leaps ”. bis central bankers ’ speeches here is the rub. we have accomplished the last $ 2 trillion of balance - sheet expansion by purchasing unprecedented amounts of longer - maturity assets : as of jan. 8, 2014, 75 percent of federal reserve - held loans and securities had remaining maturities in excess of five years. a narrow needle eye the brow begins to furrow. to be sure, treasury and mbs markets are liquid markets. but the old market operator in me is conscious that we hold nearly 40 percent of outstanding eligible mbs and of treasuries with more than five years to maturity. selling that concentrated an amount of even the most presumably liquid assets would be a heck of lot more complicated than accumulating it. currently, this is not an issue. but as the economy grows, the massive amount of money sitting on the sidelines will be activated ; the “ velocity ” of money will accelerate. if it does so too quickly, we might create inflation or financial market instability or both. the 12 federal reserve banks house the excess reserves of the depository institutions of america : if loan demand fails to grow at the same rate as banks accumulate reserves due to our hyperaccommodative monetary policy, the resultant excess reserves are deposited with us at a rate of return of 25 basis points ( 1 / 4 of 1 percent per annum ). here is some math confronting policymakers