House Hearing: Examining Monetary Policy and Economic Opportunity

So why don't you now recognize for five minutes for your oral remarks? Good morning Chairman Lucas, Reiki Mingavargas, members of the committee. Thank you for inviting, I appreciate the opportunity to testify today. My name is Joseph Wang, and my work focuses on understanding the transmission and impact of monetary policy. The ultimate effect of monetary policy depends on many variables outside of the Fed's control. So setting policy is a difficult job whose success rests upon good judgment. The significant discretion of quarters of the Fed makes oversight especially important, but the complexity of the subject makes its actions difficult to evaluate. Understanding the tools within the Fed's grasp and corresponding trade-offs in their use can be helpful in that regard.

那么，您现在为何不开始五分钟的口头陈述呢？早上好，主席卢卡斯、瑞奇·明格瓦尔加斯，以及各位委员会成员。感谢您的邀请，我很高兴有机会在今天作证。我叫约瑟夫·王，我的工作重点是研究货币政策的传导和影响。货币政策的最终效果取决于许多美联储无法控制的变量。因此，制定政策是一项需要良好判断力的困难工作。美联储的广泛自由裁量权使得监督变得尤为重要，但该主题的复杂性又使得评估其行动变得困难。理解美联储所掌握的工具及其使用中涉及的权衡可能对此有所帮助。

But before discussing their tools, I will note the Fed's significant influence over the economy stems in part from the ambiguity within their dual mandate of price stability and full employment. While price stability is a mandate given by Congress, the current 2% inflation target was decided by the Fed itself. The level of the unemployment rate considered to be full employment is also decided by the Fed itself, where they decide to set these goalposts has wide-ranging impacts on everyday people. Generally speaking, the two mandates call for conflicting policy prescriptions. The balance between the two mandates is a judgment left to the Fed, as is the appropriate timeline to meet their goals. The Fed's discretion to set its own goals, to balance these goals, and to set timelines to achieve them makes oversight difficult.

在讨论他们的工具之前，我想指出，美联储对经济的重大影响部分源于他们关于价格稳定和充分就业的双重职责中的模糊性。虽然价格稳定是国会赋予的职责，但当前的 2% 通胀目标是美联储自行决定的。被认为是充分就业的失业率水平也是由美联储自行决定的，他们决定设定这些目标的位置会对普通民众产生广泛的影响。一般来说，这两个任务往往需要相互冲突的政策处方。如何平衡这两个任务以及实现目标的合适时间线，取决于美联储的判断。美联储自行设定目标、平衡这些目标以及设定实现它们的时间线的酌情权使得监管变得困难。

Moving on to the Federal Reserve's tools, the Fed's primary monetary policy tools are interest rates and balance sheet policy. Regular trade policy is an additional tool that does not explicitly target monetary policy goals, but also has significant impact on the economy and financial markets. Your reliance on interest rate policy means that the economic impacts of monetary policy are primarily through interest rate-sensitive sectors. Typically, higher interest rates would dampen economic activity in sectors like housing and autos, as buyers in those sectors tend to finance their purchases. This lays the brunt of economic adjustments onto blue-collar workers. Note that the overall economy's interest rate sensitivity also varies over time, where an asset-like services-focused economy tends to be less interest rate sensitive.

关于美联储的工具，美联储的主要货币政策工具是利率和资产负债表政策。常规贸易政策是额外的工具，虽然它并不明确针对货币政策目标，但对经济和金融市场也有显著影响。依赖利率政策意味着货币政策对经济的影响主要通过与利率敏感的行业来实现。通常，较高的利率会抑制住房和汽车等行业的经济活动，因为这些行业的买家往往依赖融资进行购买。这使得经济调整的压力主要落在蓝领工人身上。需要注意的是，整体经济对利率的敏感性也会随时间变化，例如以服务业为主的经济体通常对利率的敏感性较低。

Interest rates also impact economic activity through the wealth effect, where higher rates lower the price of financial assets, and thus, the spending power of households. Asset holdings are concentrated in a small percentage of the population, but that, too, has an outsized impact on economic activity. One last note on interest rate policy is its impact on fiscal policy, as a level of the public debt has risen, so has a level of interest rate payments. Interest rate expenditures now exceed $1 trillion a year, in part due to the level of interest rates. An increasingly important side effect of Fed actions is its impact on the nation's budget.

利率还通过财富效应影响经济活动。当利率上升时，金融资产价格会下降，从而降低家庭的消费能力。虽然资产持有主要集中在少数人手中，但这也会对经济活动产生较大影响。关于利率政策还有一点需要注意的是其对财政政策的影响。随着公共债务水平的上升，利息支付也随之增加。由于利率水平的缘故，利息支出现在每年已超过1万亿美元。美联储行动的一个越来越重要的副作用就是其对国家预算的影响。

The Fed's secondary tool is its balance sheet, which can influence interest rates, and also allocate credit. The Fed can create money out of thin air and lend directly to borrowers, or indirectly through purchases of debt. This is essential to performing its lender of last resort function. Fed purchases of securities are limited to a very small subset of assets that include mortgage-backed securities, which is in effect allocating credit to home buyers. Most recently, it was deployed during the pandemic, where hundreds of billions of dollars' worth of mortgages were purchased even as home prices nationally surged by 20% in a year. The distributional consequences of those actions look to last many years.

美联储的第二个工具是其资产负债表，这可以影响利率，并且分配信贷。美联储能凭空创造货币，直接借给借款人，或者通过购买债务间接借出。这一功能对于执行最后贷款人职责至关重要。美联储购买的证券仅限于一种非常小的资产类别，其中包括支持抵押贷款证券，这实际上是在为购房者提供信贷。最近，美联储在疫情期间动用了这一工具，购买了数千亿美元的抵押贷款，即使当时全国的房价在一年内飙升了20%。这些行动的分配性后果预计将持续多年。

Regulatory policy is less visible, but also an influential part of the Fed's toolkit. Regulatory policy places constraints and costs on the actions of banks. More stringent regulation reduces the willingness of banks to take risks, and results in a stronger banking system. However, a more constrained banking system also limits the supply of credit to the public. Small and medium-sized businesses are more heavily reliant upon banks for financing, whereas larger businesses tend to borrow directly from the capital markets. More stringent regulation also impacts the function of treasury markets and the level of interest rates. Regulations like the supplementary leverage ratio contributed to the strength of the banking sector through the pandemic, but also the malfunction of the treasury market at that time.

监管政策虽然不那么显眼，但也是美联储工具箱中有影响力的一部分。监管政策对银行的行动施加了约束和成本。更严格的监管削弱了银行冒险的意愿，从而使银行系统更加强大。然而，更受限制的银行系统也限制了对公众的信贷供应。中小企业更加依赖银行融资，而大企业则倾向于直接从资本市场借款。更严格的监管还影响国债市场的运作和利率水平。诸如补充杠杆率之类的法规在疫情期间增强了银行行业的稳健性，但也导致了当时国债市场的运转不畅。

In summary, the Federal Reserve has a large latitude in setting its own goals and exercising a range of tools towards achieving those goals.

总之，美国联邦储备委员会在设定自身目标和使用各种工具来实现这些目标方面有很大的自由度。

How those goals are set, and which tools are used have large impacts on the lives of the American people. This makes it a task of overseeing the activities of the Fed both very important and difficult.

这些目标是如何设定的，以及使用哪些工具，对美国人民的生活有着巨大的影响。因此，监督美联储的活动既非常重要又极具挑战性。

I thank Chairman Lucas and Chairman French for their wisdom in establishing this task force to improve the performance of monetary policy towards greater economic prosperity.

我感谢卢卡斯主席和弗伦奇主席，他们富有智慧地成立了这个特别工作组，以提升货币政策的表现，实现更大的经济繁荣。

Thank you, Mr. Wang.

谢谢您，王先生。