kevin m warsh : the panic of 2008 speech by mr kevin m warsh, member of the board of governors of the us federal reserve system, at the council of institutional investors 2009 spring meeting, washington dc, 6 april 2009. * * * deterioration in employment conditions. pullback in consumer spending. decline of industrial production. retreat in capacity utilization. falling capital expenditures. these measures are objective, all - too - familiar indicators of recessions. they emerge during periodic troughs in our economic history. they are thought by most observers to be part of the business cycle. the decennial recessions of 1981 - 82, 1991 - 92, and 2001 - 02 were of differing causes and consequences. but they were alike in one key respect : they were extremely disruptive to countless workers, businesses, and communities. in the case of the united states, these periods were endured, and growth resumed apace, matched by new opportunities. the march of growing prosperity, however imperfect and interrupted, continued. 1 fear. breakdown in confidence. market capitulation. financial turmoil. these words are different, not just in degree but also in kind. they are more normative, but no less consequential to the real economy. they are indicative of panic conditions. in panics, once firmly held truths are no longer relied upon. articles of faith are upended. and the very foundations of economies and markets are called into question. some economists, market participants, and historians – not so long ago – were prepared to relegate these highly charged descriptions of despair to the dustbin of history. government policies improved, understanding of economics deepened, and markets found a more sustainable equilibrium, or so it was thought. the period of the past 16 months is already well chronicled in the popular lexicon as a recession. the recent data are consistent with the view that this recession will endure longer and be deeper and broader than most. characterizing the current period as a " recession " is still wanting, insufficient in some important respects. in my view, this period should equally be considered a panic, one that preceded, if not made more pronounced, the official recession. hence, the panic of 2008, which preceded the calendar year, is a more revealing description of the recent economic and financial travails. as i will describe, panics involve generalized fears – often related to financial firms – that magnify economic weakness. the encouraging news, i should note, is that panics end.

janet l yellen : shaping the future of the macroeconomic policy mix remarks by ms janet l yellen, chair of the board of governors of the federal reserve system, at the panel discussion on “ shaping the future of the macroeconomic policy mix ”, international symposium of the bank of france “ central banking : the way forward? ”, paris, 7 november 2014. * * * i would like to thank the banque de france for inviting me to take part in what i expect will be a lively discussion. the suddenness and severity of the global financial crisis forced policymakers to respond rapidly and creatively, employing a wide range of macroeconomic tools – including both monetary and fiscal policies – to arrest a steep economic downturn and restart the global economy. given the slow and unsteady nature of the recovery, supportive policy remains necessary. today i would like to briefly review the evolution of monetary and fiscal policies following the global financial crisis both in the united states and in other advanced economies, since we have faced similar experiences and employed similar policy responses. i will try to draw some lessons and provide some thoughts on the policy mix going forward. policy before the crisis prior to the global financial crisis, inflation rates in the united states and other advanced economies were near their target levels and most of these economies appeared to be operating close to their potential. policy interest rates were similarly in the vicinity of levels considered to be normal. fiscal deficits also appeared to be under control before the crisis. according to the organisation for economic co - operation and development ( oecd ), general government deficits in 2007 were less than 4 percent of gdp in the united states and the united kingdom, about 2 percent in japan, and less than 1 percent, on average, in the euro area. still, given relatively buoyant economic conditions, governments probably should have been doing more to prepare for the long - term challenge of aging populations, which will boost pension obligations and health - care expenditures in coming years. moreover, government debt levels were already high in japan and in some european economies and not particularly low elsewhere. in addition, some euroarea countries that appeared to have strong fiscal positions going into the crisis depended partly on revenue from housing booms that soon went bust. the policy response to the crisis when the crisis hit, its global scope and severity were exceptional. central banks in the united states and other countries responded by rapidly and sharply reducing their policy interest rates, lowering them in many cases to near zero.