“ the grand experiment in modern monetarism. ” 5 i posited we will not know until the final act whether the play will end felicitously or otherwise. i thought i would update that analogy here today. here is the cliffsnotes summary : the play opened with the great financial tempest of 2008 – 09, during which it appeared the ship of the mighty american economy would founder. a humble, once unassuming but suddenly daring captain named ben bernanke took firm control of the nation ’ s monetary helm in act ii, working with his officers – the fomc – to contrive innovative ways to keep the economy afloat by jury - rigging monetary policy and adopting radical tactical maneuvers. these efforts succeeded in steering the ship of the economy away from the shoals of depression and deflation and into more tranquil waters. act iii began with a recovering economy heading on a more promising course. but the headway being made was substandard, hindered by the flotsam and jetsam of fiscal incompetence and rising fears of a new storm brewing in europe. in an effort to propel the economy forward at a better clip, the fomc commanded that unprecedented amounts of monetary fuel be provisioned for the financial system through large - scale asset purchases, the proceeds of which were pumped into the stores of banks. but as act iv began, the banks lingered in the wings rather than taking center stage. rather than shovel their abundant means into their loan boilers, they were parsimonious and hoarded their fuel. other members of the financial fleet, however, were heartened by the turn of events, especially those who finance themselves through the issuance of stocks and bonds rather than through bank loans. they danced a happy jig while they decorated their balance sheets with cheaper debt and improved their margins and earnings per share bis central bankers ’ speeches through share buybacks. slowly they began to hire new workers, and the ship of the economy started gathering momentum to steam along at an improved clip. as act iv came to an end, the fomc evaluated the utility of its navigational tactics, and having tentatively decided that it was on course to its desired destination, began cutting back on the amount of fuel it was pumping into the financial system. initially, it fumbled the dialogue, but eventually the articulation of its intention was accepted, if not applauded, by its audience. now we have entered act v. not

officers and crew, present company included, we do not know how “ the grand experiment ” drama will end. we certainly all hope it proves an inspiring history, not a tragedy. but, we will not know for some time. we will not know until the curtain drops on act v. r. i. p? betsy duke had it right : only when we have normalized monetary policy – only when the play is done – will we know if qe3 rests in peace or comes back to haunt us. only when it is done will we know if “ the grand experiment in modern monetarism ” is a smash hit or a bomb or something in between. as yogi berra said and lenny kravitz sang : “ it ain ’ t over till it ’ s over. ” but one thing i know for sure : this speech is over. thank you for listening. and now, mickey, time and patience permitting, i would be happy to avoid answering any questions you and your colleagues might have. bis central bankers ’ speeches notes “ a conversation : the fed yesterday, today and tomorrow, ” a discussion with federal reserve chairman ben bernanke on the fed ’ s 100th anniversary, brookings institution, washington, d. c., jan. 16, 2014. see “ the next default wave : slow and low, ” in the hy wire, bank of america merrill lynch, sept. 24, 2014. the following charts illustrate the recent acceleration in wage growth ( chart 1 ) and the relationship between rising wage growth and falling unemployment ( chart 2 ). for more information, see the dallas fed economic letter titled “ are we there yet? assessing progress toward full employment and price stability, ” available at www. dallasfed. org / assets / documents / research / eclett / 2014 / el1413. pdf. bis central bankers ’ speeches see “ the federal reserve ’ s experiment in quantitative easing is coming to an end, ” by ylan q. mui, the washington post, wonkblog, oct. 28, 2014. if you wish to read that speech in its entirety, www. dallasfed. org / news / speeches / fisher / 2013 / fs130604. cfm. see “ the limits of monetary policy : ‘ monetary policy responsibility cannot substitute for government irresponsibility ’, ” remarks by richard w. fisher, jan. 12, 2011. bis central bankers ’ speeches it can be found at