Reflections on Economics, Policy and the Financial Crisis

I am deeply honored to accept this award. Although my family left the Bluegrass State and migrated to the northeast early in my life, I have deep family roots here. My Grandfather Sholto Spears grew up around Auburn, for example. So I retain a fond spot in my heart for My Old Kentucky Home, and I know this award would have made my Grandpa Sholto proud. In my remarks today, I would like to share some reflections on the role of economics in policy making during this financial crisis.1 Over the last few years, I have had the privilege of witnessing, and at times participating in, some of the most challenging economic policy deliberations imaginable. Be under no illusions about my role, however; mine was a bit part at best. But my position gave me a unique vantage point on the making of policy during this financial crisis, and the fact that my teaching and research had been focused on banking and financial intermediation gave me a special interest in the events. I should note that these reflections are my own, however, and not necessarily shared by any of my colleagues on the Federal Open Market Committee.