2026 Foreign Policy Association Financial Services Dinner

President Goolsbee's Remarks

Thank you, Dr. Crow, for that introduction and your comments on the economy.

I'm deeply honored and humbled to receive this medal.

The Foreign Policy Association has been around for more than a hundred years, and you were ahead of almost everyone in identifying the ways that finance and foreign policy are integrally related. A dear friend that I worked for and got close with was Paul Volcker. And I remember when the Foreign Policy Association gave him a medal back in 2016. And if you were there or if you see it today, his speech was about the role of public service, and the importance of encouraging talented people to embrace the mission of serving the public, AND that we protect them to do their job. We should demand excellence in government and also keep a safe harbor for them to do so. And nowhere is that more true today than at the Fed.

The Fed and the Foreign Policy Association, it's almost like they went to school together. The Fed started in 1913, the FPA 1918. Both were founded in the wake of a crisis of public trust in our institutions. For the Fed, it was the Panic of 1907. For the Foreign Policy Association, it was World War I. In both cases, people believed that institutions had failed and we needed to kind of start from the ground up.

We face a different crisis of public trust today in our public institutions. Anything that's perceived as faceless bureaucracy, as elite, as the government, as a big bank—the Fed is sort of in the Venn diagram of suspicion.

I've been at the Fed for a little over three years. And at my very first talk to the Chicago Fed employees, I told them about the polling. A large majority of the public said they were familiar with the Federal Reserve, but they did not really know what it did. And an even bigger majority said that, even if they didn’t know what it did, they thought the Fed was doing a bad job.

We have tried to make demystifying the Fed—who are we and what we do—a key priority at the Chicago Fed. Like with the Foreign Policy Association, where from the beginning you decided that making good foreign policy depends on an educated public, it’s true for the Fed, too. As I like to say, we're not the bad guys. We're the guardians of the galaxy—and not the raccoon one either, the main ones.

It’s worth remembering that the Fed as a central bank was actually our third try in this country. We had two central banks before, and they both were abolished because they were perceived by the public—not incorrectly—to be too centrally controlled.

The people then, and again in 1913, as today, were deeply uncomfortable with the idea that the federal government plus banks on Wall Street would control the entire financial system of the United States without input from the rest of the country. So, they created a Federal Reserve System that included reserve banks from around the country to bring an independent perspective to the FOMC meetings.

Those Reserve Bank presidents are not political appointees. Each of the 12 Banks has a board of directors made up of business and civic leaders in that region, and the board hires them.

This has proved to be an inspired choice from the Federal Reserve Act. Over the 113 years, many of the most important ideas about monetary policy have come from these same regional banks.

They also play key operational roles in the financial system. We run much of the payments system of the country, with more than $5 trillion a day going over the Fed rails. All the cash in the economy is printed by the Bureau of Engraving and Printing, but it is distributed through the Reserve Banks. Look at a $1 bill in your wallet and around that letter on the left you will see what Reserve Bank it’s on the balance sheet of. (Remember, your asset is our liability.)

The Federal Open Market Committee sets monetary policy. I believe that, for the 21st century, that is the world's greatest deliberative body. It's made up of people who come from different backgrounds and different places in the United States, and each member takes the job extremely seriously. I say it's kind of like joining the Night's Watch. You're out of the elections business. You're out of any business except following the dual mandate, which says that what drives monetary policy by law is stabilizing prices and maximizing employment. And you pledge to deal with whatever conditions come down the pike. I always say at the Chicago Fed, our motto is: There's no bad weather, only bad clothing. You tell us what's coming, and we'll put on the right jacket.

I would like to dedicate this medal to the hardworking people of the Federal Reserve System—to their excellence and to the monetary independence they enable. The world has learned the hard way over the last 113 years how important central bank independence is for keeping inflation under control.

Let me close, though, with one thought about the economy, which is a modified version of a conversation I once had with Warren Buffett. Buffett asked me what I thought the Dow was in 1900. Truly, I had no idea the Dow even existed in 1900. So, I will put it to you in Foreign Policy Association terms—what do YOU think the Dow was in 1918, when the Foreign Policy Association began? The answer is 82. The Dow was at 82 in 1918. In 1913 when the Fed started it was 78—so it wasn’t a great time to invest from 1913 to 1918, I suppose.

So if you returned, “Back to the Future” movie-style, to the original Foreign Policy Association meeting in 1918 and asked them what they thought the Dow would be in 2026, what would they say? And you give them the list of all the things that were going to go wrong for the next 108 years—a Great Depression, World War II, bank runs, pandemics, AI replacing our jobs, the Kardashians become billionaires. What will the Dow be if all of these things happen? They might say 90. Hell, maybe it will be down to 60.

So how is the Dow pushing 50,000 when so much went wrong?

You know the answer. The ingenuity and capacity of the American people and of human beings in general has proven to be unbounded. Many things have gone wrong and will continue to. But at the end of the day, it will work out. If we return for the FPA’s 208th anniversary dinner, people will say, “Yeah, the 2020s, sheesh, those were some trying years. What do you make of the Dow hitting 250,000?”

So, thank you so much for having me, and good luck for you and for the economy.

The views expressed today are my own and not necessarily those of the Federal Reserve System or the FOMC.