economy over the next decade could generate enough saving and investment to make that increased future workforce productivity feasible. slower growth and repeated recessions could make the burden of an aging population far heavier and policy choices more contentious. what policies are needed? these three challenges to the american economy simply reinforce the need to keep the economy on the highest sustainable growth track attainable and to keep recessions as shallow and infrequent as possible. the biggest problem for monetary policy at the moment is that no one knows what growth rate is sustainable. it may be true that the structure of the economy has changed in ways that make a higher growth rate sustainable without inflation than we thought possible a few years ago - - or it may not be true. the question turns on whether productivity growth has shifted up out of the doldrums of the last couple of decades. it's possible that it has, but by no means certain. this leaves monetary policymakers with the difficult job of watching all the signs, weighing the risks and making a new judgment call every few weeks. at the moment, there seems to be little risk of the economy slowing down too much in the near term and sliding into recession. growth has already slowed from its clearly unsustainable pace in the first quarter, but all the current signs point to continued economic expansion for the rest of this year and into the next. the risks seem higher on the other side - - that many of the factors holding down inflationary pressures will prove temporary, that the rebound of productivity necessary for higher sustainable growth will not occur or not prove robust and durable. the federal open market committee has to weigh the risk of slowing the economy unnecessarily against the risk of waiting too long and having to put the brakes on harder later. waiting longer may increase the possibility of overheating followed by recession. it's a tough call. i can't promise we will make the right decisions, but i can promise we will try. it is important not to overestimate the role of monetary policy and the federal reserve. monetary policy can help keep the economy from falling off the sustainable growth track in either direction - - either by overheating and generating enough inflation to unbalance the economy and threaten growth or by chugging along too slowly with excessive unemployment. but monetary policy cannot do much to determine how high the sustainable growth rate is. how fast the economy can grow is determined by how rapidly the employed labor force is increasing and how fast the productivity of

closely with the government accountability office ( gao ), the office of the special inspector general for the troubled asset relief program, the congress, and privatesector auditors on a range of matters relating to these facilities. while the emergency credit and liquidity facilities were important tools for implementing monetary policy during the crisis, we understand that the unusual nature of those facilities creates a special obligation to assure the congress and the public of the integrity of their operation. accordingly, we would welcome a review by the gao of the federal reserve ’ s management of all facilities created under emergency authorities. 6 in particular, we would support legislation authorizing the gao to audit the operational integrity, collateral policies, use of third - party contractors, accounting, financial reporting, and internal controls of these special credit and liquidity facilities. the federal reserve will, of course, cooperate fully and actively in all reviews. we are also prepared to support legislation that would require the release of the identities of the firms that participated in each special facility after an appropriate delay. it is important that the release occur after a lag that is sufficiently long that investors will not view an institution ’ s use of one of the facilities as a possible indication of ongoing financial problems, thereby undermining market confidence in the institution or discouraging use of any future facility that might become necessary to protect the u. s. economy. an appropriate delay would also allow firms adequate time to inform investors through annual reports and other public documents of their use of federal reserve facilities. looking ahead, we will continue to work with the congress in identifying approaches for enhancing the federal reserve ’ s transparency that are consistent with our statutory objectives of fostering maximum employment and price stability. in particular, it is vital that the conduct of monetary policy continue to be insulated from short - term political pressures so that the fomc can make policy decisions in the longer - term economic interests of the american people. moreover, the confidentiality of discount window lending to individual depository institutions must be maintained so that the federal reserve continues to have effective ways to provide liquidity to depository institutions under circumstances where other received. a revised proposal will be reviewed by the federal reserve board, and test transactions could commence during the second quarter. see bernanke, " federal reserve ’ s exit strategy, " in note 2. last month the federal reserve said that it would welcome a full review by the gao of all aspects of the federal reserve ’ s involvement in the extension of credit to the american international