alan greenspan : jackson hole conference - reflections on central banking remarks by mr alan greenspan, chairman of the federal reserve board of governors, at a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, 26 august 2005. * * * in the spirit of this conference, i asked myself what developments in the past eighteen years - both in the economy and in the economics profession - were most important in changing the way we at the federal reserve have approached and implemented monetary policy. the federal reserve system was created in 1913 to counter the recurrent credit stringencies that had so frequently been experienced in earlier decades. as lender of last resort, we had a mandate that, at least viewed from today's perspective, was limited. we did not engage in systemwide open market operations until the 1920s. and as recently as the 1950s, the framework within which those open market operations were formulated was still being developed. credit was eased when the economy weakened and tightened when inflation threatened, but largely in an ad hoc manner. as a consequence, the federal reserve was perceived by some as often accentuating, rather than damping, cycles in prices and activity. importantly, however, the surge in prices that followed the removal of wage and price controls after world war ii and again after the korean war kept monetary policymakers wary of the threat of inflation. but concern that the monetary restraint of the 1950s had led to unnecessarily high unemployment persuaded the federal open market committee to adopt a more stimulative policy stance in the mid1960s. those actions appear to have been predicated, in part, on an acceptance of the then - prevalent view that a long - term tradeoff existed between inflation and unemployment. 1 subsequently, however, the experience of stagflation in the 1970s and intellectual advances in understanding the importance of expectations - which built on the earlier work of friedman and phelps - undermined the notion of a long - run tradeoff. 2 inflation again became widely viewed as being detrimental to financial stability and macroeconomic performance. and as the decade progressed, a keener appreciation for the monetary roots of inflation emerged both in the profession at large and at central banks. indeed, the insights from the work of friedman and schwartz a decade earlier gained greater prominence in the realm of practical policy. 3 these events, both economic and intellectual, significantly influenced the tool kits employed by macroeconomists inside and outside policymaking institutions. the large - scale macromo

deal - i thought i might do a ph. d. in philosophy at one point, when i was studying philosophy at oxford university and at the universita© cheikh anta diop de dakar in senegal. but economics turned out to be my purpose and my passion. economics is the fundamental toolkit i use to find answers to the multitude of questions swirling around my head at any given moment. i see economics at work in everyday life and know how foundational it is to every society and community's success. there is a passage from an alice dunbar - nelson poem - because why quote the rest when deltas are the best - that goes : how few of us in all the world's great, ceaseless struggling strife, 2 / 7 bis - central bankers'speeches go to our work with gladsome, buoyant step, and love it for its sake, whate'er it be. delta's dedication to learning and public service gave us an advantage in considering the mission that would occupy our lives. we thought about the change we could make and the influence we could have. we did the advanced calculus that measured the goodness of trouble against the enormity of student debt payments. we knew we wanted work - whether a professional calling or life's work - that, as soror alice said, we loved " for its sake. " while i do not always have a buoyant step, and " gladsome " is probably not the first word i would use to describe myself, i do love my work for its sake, which is a tremendous gift. and i was drawn to delta, because i wanted to be surrounded by people who would use their talents and passions to improve the lives and well - being of all people in the world. why am i bringing this up today? i am sticking to the assignment : deltas embracing the past and shaping the future. we are here to commemorate our founders, our forebears, and the ties that bind us. to celebrate the ways that delta's esteemed history brought each of us through its doors, and how membership helped to shape who we are and who we are yet to become. and delta, along with other divine nine organizations, can be key to shaping the future of economics. diversity is critical to any profession, but particularly to those - like economics - that tend toward the homogenous. or those - like economics - that affect people's daily lives. as policy