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4 Fed Chairs Talk Publically For The First Time About The Job

STEVE INSKEEP, HOST:

Every once in a while, a special occasion brings together all the living presidents. It's never a big group. Last night came a similar gathering for the only four people alive who have led the Federal Reserve. Whoever holds that job makes choices that can influence every part of the world. NPR's Jim Zarroli listened to their conversation.

JIM ZARROLI, BYLINE: It wasn't strictly speaking a joint appearance. Janet Yellen, Ben Bernanke and Paul Volcker appeared together on stage at the International House in New York. Ninety-year-old Alan Greenspan was supposed to attend, but ended up speaking remotely from Washington instead. In his day, Greenspan was famous for his own particular brand of Fed speak, murky statements that equivocated so much they sometimes didn't seem to be saying anything at all. Greenspan told the audience the job of Fed chair requires a certain caution when talking to the public.

(SOUNDBITE OF ARCHIVED RECORDING)

ALAN GREENSPAN: How do you convey what you know and what is clear without going into the area of forecasting beyond our knowledge?

ZARROLI: In the aftermath of the financial crisis, Greenspan's two successors, Bernanke and current Fed chair Yellen, have tried to be much more open about Fed policy, even holding regular news conferences. Yellen said the markets are affected not just by what the Fed does with interest rates, but by what the public thinks it's going to do.

(SOUNDBITE OF ARCHIVED RECORDING)

JANET YELLEN: We thought very hard about how to communicate as clearly as we could to shape expectations to - that was a policy tool in and of itself.

ZARROLI: The financial crisis has also brought another kind of change. With interest rates at rock-bottom, the Fed has pursued a policy of quantitative easing. It's essentially a way of sending money out into the economy to stimulate growth by buying of bonds and other assets. CNN host Fareed Zakaria who moderated the panel asked Bernanke about the huge increase in the Fed's balance sheet that has resulted.

(SOUNDBITE OF ARCHIVED RECORDING)

FAREED ZAKARIA: So how will it end? How will you unwind that enormous asset portfolio?

BEN BERNANKE: Well, fortunately, I don't have to do it.

(LAUGHTER)

YELLEN: Leave that to me.

ZARROLI: Bernanke went on to defend quantitative easing. He said a lot of people predicted it would weaken the dollar and bring about inflation. None of that happened. Instead, the economy has gradually improved. During his tenure, Bernanke was the subject of sometimes brutal criticism from Congress, but he said the Fed's independence had more or less shielded him from the critics.

(SOUNDBITE OF ARCHIVED RECORDING)

BERNANKE: That left the critics the ability just to say what they wanted to say, but we could do what was needed at least within as long as we could maintain, you know, the broad support. And that was our strategy. So, you know, I didn't take the job for, you know - for adulation. And certainly if I had, it wouldn't have worked.

ZARROLI: At one point, Bernanke was asked what it felt like to hold such a powerful job. The sense of power, he said, was outweighed by the huge feeling of responsibility, especially during the Great Recession. Paul Volcker who was appointed Fed chair by Jimmy Carter recalled coming into office at a time of very high inflation. The Fed raised interest rates which helped push the country into recession, and Volcker spent his days pacing in his office.

(SOUNDBITE OF ARCHIVED RECORDING)

PAUL VOLCKER: Did I worry? I worried all the time. I don't know what it is - the smog (ph) on the floor of the Federal Reserve office has a, you know - it shows where I was walking all down it all the time. It's still there (laughter).

ZARROLI: Today, the problems are much different. For Fed officials, inflation is no longer much of a factor. Instead, the challenge is how to get the economy growing faster. And with Congress at a stalemate, people are more than ever looking to the Federal Reserve for answers. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

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