Federal Reserve official touts benefits of regionalism during Kingsport visit

Hank Hayes • Aug 21, 2018 at 11:51 AM

KINGSPORT — Federal Reserve Bank of Atlanta President and CEO Dr. Raphael Bostic told a room full of local bankers what they wanted to hear on Monday.

“The economy is doing pretty well,” Bostic said during a luncheon held by the three Tri-Cities chambers of commerce at the MeadowView Marriott. “We’ve been in a growth trajectory for, I think, more than nine years now. That’s a very, very long time to be in a growth perspective. … I’m pleased at how the economy is performing relative to our metrics.”

Bostic addressed these questions:

What happens economically when communities band together and act regionally?

“The economy is actually much more competitive. … In Georgia, there are 159 counties. … The smallest county in Georgia has 1,700 people. … Small places are going to continue to suffer as long as they think small. … They need to show themselves as a well functioning collective. … We do have examples of success. In Mississippi, around Starkville, you have the Golden Triangle there. The cities and counties bound together as one unit … and they’ve done a great job attracting businesses … for this region, the question is: What are you going to be?”

How does the Federal Reserve deal with cyber security threats?

“Cybersecurity keeps me up at night. … The bad guys try something else. It’s this race, that is continually going on and there’s not an end to it. … We talk a lot with our banks about what are you doing about cyber security. … We encourage our institutions to have exercises about what to do if there is a successful attack.”

What’s the future of cryptocurrency?

“They don’t operate like currencies. They operate as a speculative asset in terms of the volatility. … That’s not the way we want currency to function.”

Does diversity matter at the Federal Reserve?

“The first thing I worked on when I was an economist at the Fed, I had one guy who was a Libertarian, another guy who was a ’60s hippie, and I was somewhere in between. We wrote our papers such that every paper had to be agreed to by all of us. … Diversity made that incredibly difficult. … From my perspective … that told me diversity made my product better and made our work better.”

Does the national debt matter?

“Debt, in and of itself, is not bad. We all use debt to accomplish things we couldn’t have otherwise. The question is: What do we do? … Are we using it as funds to raise up, increase our output, of the value of the things that we do? If we can do that, then it will be OK. If we don’t do that, then we got a problem.”

What about trade and President Trump’s tariffs?

“What I’m hearing from businesses is ‘I don’t know what I should do for the medium to longer term because I don’t know what the rules are going to be.’ … I have no insights into what the policy will be next week. … Trade touches almost every aspect of every market sector.”

Are you concerned about Trump’s criticism of Federal Reserve Chairman Jerome Powell?

“What I try to do is keep my head down, focus on the numbers and go to places like Johnson City and Bristol and Kingsport, talk to business leaders to understand what they’re seeing and how the economy is performing and allow that to inform my policy viewpoints. … The independence of the Fed is extremely important.”

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