but it is especially important in periods of economic stress, because it reminds bankers that the identification of a troubled borrower does not prohibit a banker from working with the borrower. many banks engaged in agricultural lending are located in communities where farming is the primary economic driver, and simply pushing every borrower with challenges out of the bank does not benefit the long - term interests of the bank or the community it serves. the federal reserve recognizes the benefits when lenders work prudently with troubled borrowers in a way that serves the long - term interests of all stakeholders. i would like to conclude by recognizing how fortunate we are to have so many highly skilled and experienced farmers and operators, and agricultural lenders who support them. modern agriculture is a sophisticated and complex business that requires skilled forecasting of supply and demand, rigorous financial and operational management, and sharp technical expertise. our farmers and operators are pushing forward the frontiers of agriculture. the integration of robotics, data analytics, geolocation, and advanced sensors holds the promise of a new, more efficient and productive era of “ precision agriculture. " a close working relationship between farmers and agricultural lenders is essential to the economic growth of agricultural borrowers and the continued success of many rural communities. the outlook for u. s. agriculture is challenging, though agricultural banks remain relatively stable. as such, it is important for the federal reserve to continue to tailor effective supervision and regulation to ensure the safety and soundness of agricultural banks, while also making sure that undue burden does not constrain the capacity of these institutions to continue supporting the agricultural communities that they serve. 1 terrorism risk insurance program reauthorization act of 2015 ( pub. l. 114 – 1, 129 stat. 3 ). 2 see u. s department of agriculture, economic research service at www. ers. usda. gov / data - products / ag - and - food - statistics - charting - the - essentials / ag - and - food - sectors - and - the - economy /. 3 jerome h. powell, “ monetary policy in a changing economy ” ( speech at changing market structure and implications for monetary policy, a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, august 24, 2018 ). 4 u. s. department of agriculture, economic research service, “ highlights from the march 2019 farm income forecast. ” 5 cortney cowley and ty kreitman, “ farmland values stable, but risks to

edward m gramlich : budget and trade deficits - linked, both worrisome in the long run, but not twins remarks by mr edward m gramlich, member of the board of governors of the us federal reserve system, at the euromoney bond investors congress, london, 25 february 2004. * * * thank you for inviting me to speak today. while i know that most of you would welcome any insights i might have about current u. s. monetary policy - whether the open market committee will be raising or lowering interest rates at our next meeting - i prefer to focus instead on some issues that could become serious over the longer run. these issues involve the persistent budget and trade deficits facing the american economy, issues that could eventually involve significant economic adjustments around the world. 1 large budget and trade deficits are not a new phenomenon. they also arose in the united states in the mid - 1980s. at that time, the business press and many economists began referring to the situation as one of “ twin deficits. ” with the current re - emergence of both deficits, the phrase has come back into common usage - too common, in my view. to be sure, in theoretical models there is a scenario by which budget deficits can create trade deficits, and one by which trade deficits can create budget deficits. but there are also many scenarios by which either deficit can arise independently, or even by which budget and trade deficits can move in opposite directions, as they did in the 1990s. in general, while budget and trade deficits can be linked, there are important differences between the two, both in how they respond to economic forces and in their long - run consequences. i start by examining the relationship between budget and trade deficits - why they are linked but not twins. i discuss the sustainability conditions for budget and trade deficits ; the conditions that must be fulfilled for the debts on both accounts to be stabilized in relation to the size of the u. s. economy. then i discuss what happens if either debt violates this condition and rises in relation to the size of the economy. this discussion, in turn, raises further interesting distinctions between the two deficits. the link the link between budget and trade deficits can be seen most naturally through the national income accounting framework. any saving the nation does finances either private domestic investment directly or the accumulation of claims on foreigners. this means that national saving - the sum of private and government saving - equals private domestic