by Bryan Jones
On October 14, 2014, the University of West Georgia hosted an informal roundtable sponsored by the Center for Economic Education, the department of economics and the College of Education. As part of this event, several talented high school economics students from Carrollton High School and Central High School took part in a question and answer session with Michael Chriszt, vice president of public affairs at the Federal Reserve Bank of Atlanta, in Adamson Hall.
From the onset of the event, Michael drove home a sound piece of advice to the high school students in attendance that he picked up from his own life experience.
“If I had any regrets in my life it is not showing enough thankfulness to my high school teachers,” he said.
The event began with a brief speech discussing the various aspects going on at the Federal Reserve today.
“The current discussion has focused on two key things. One is the timing of liftoff, or when the Federal Reserve goes away from the 0 percent interest policy and begins to increase interest rates,” said Michael. “The other one is underemployment, or when someone is working part time but much rather be working full time.”
Afterwards, the floor was opened to student questions. A number of questions were taken during that time, including one asking why the Federal Reserve Bank had an inflation rate target of 2 percent.
“An inflation rate of 2 percent is deemed to be not too high in the sense that it is not going to be high enough to impact business’s or consumer’s decision making processes,” said Michael. “Below 2 percent is dangerous in the sense that an inflation rate that gets that low sends the economy into recession and prices fall during a recession. If you go to zero or below zero it’s deflation, and a good example of what happens in an economy during a period of deflation is the Great Depression. Once you start that road, it is so hard to recover.”
One other question, which in of itself is still a debate today among some groups, involved the move away from the gold standard into the current system our money is based on today and the reasoning behind the move.
“The global financial system grew beyond that very simplified monetary system,” he said. “An inflation target by a central bank is similar to the gold standard. In an inflation target, the central bank is telling you what the value of the currency is. In a gold standard, they’re also telling you what the value of the currency is going to be.”
For more information on the Federal Reserve Bank in Atlanta, please visit www.frbatlanta.org.
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