Economic Mystical World

Meeting with Vice President of Federal Reserve

in China Future Leadership Project CFL(中国未来领导精英项目)

Chen Ru

陈茹 现就职于福特中国 (Ford. China)

此文是参加中国未来领导精英项目时受美联储副主席Mr. Richard Walker接见时感想

Known as the gatekeeper of the U.S. economy, Federal Reserve is the central bank of the United State—the bank of banks and the bank of the U.S. government. Before I went to U.S., Fed was a mystery to me for its power of stimulating and slowing down the economy like an invisible giant. As I knew more of its functions and tools, and particularly discussed tricks they’ve applied face to face with Mr. Richard Walker, Vice President of Fed and his representative Mr. Mark Lloret through CFL project on how Fed operates the macro control in Federal Reserve Bank of Boston, it’s becoming real.

The day when I arrived at Federal Reserve Bank of Boston I felt it’s nothing like a common bank but a military place, where I was given a special sticker at the main entrance to be pasted on the clothes so that I could be traced anywhere within the building. After the first step, I was kindly asked by a black and stout lady to take off the overcoat, watch and put down handbag to place them on a half closed and movable conveyor. Then I went through the electronic detecting door, which was similar to that of customs inspection, to finally get entered.

Psychologically, the sticker made me feel uneasy until the vice president Mr. Walker addressed relaxing and warm open remarks. Then Mr. Lloret started with introduction of Fed’s history, organization structure, nationwide layout and role, followed by an enthusiastic discussion on Fed’s current monetary policy and the impact to U.S. economy. We know that American economy was in downturn all the way from 2007 until now, which was demonstrated by laying off employees by Fortune 500 enterprises and continuing depreciation of U.S. currency, etc. At the end of Jan.08, the overall stock price dropped dramatically, which aroused large sensation in every major media across-the-board. During that period Fox, NBC and other news agencies kept focusing on the stock report and newspaper such as New York Times, Wall Street Journal put stock issues as headlines with no exception. That’s why Fed had cut interest rate as Wall Street Journal Online put it “drastically” so that they could indirectly influence demand, which then influenced the economy. The purpose of Fed’s manipulation is to maintain low inflation, high employment rates, and manufacturing output. To this end, Fed has some pretty hefty tools up its sleeve such as the reserve requirement, the discount rate and open market operations in order to influence the economy of the entire country. Some of these measures may have immediate effect, others may have long-term impact. From time to time, even if there’s no instant positive result, the American society is still progressing in order, as we see the wise managements adjusted their strategies and business forecast to align with new policy, the financial institution changed internal structure in time, and the average people reconsidered their financial portfolio to minimize risk and seek profit.

The market, full of fluctuation and uncertainty though, is still faced by confident and calm American people like Richard and Mark. I firmly believe that no matter when Americans can embrace the economic recovery, their courage and wisdom in combating the risk of heading into recession will turn to be precious experience and reference to China and rest of the world.