John Taylor, Prominent Economist, Kicks Off 2014 FWSF Industry Leadership Series

John TaylorThe Financial Women of San Francisco Industry Leadership 2014 kick-off luncheon on February 12, with about 80 attendees, featured John B. Taylor at San Francisco’s City Club. Mr. Taylor is a professor of economics at Stanford University and the George P. Schultz Senior Fellow in Economics at Stanford University's Hoover Institution. He is also a former Undersecretary of the Treasury for International Affairs and a former member of the President’s Council of Economic Advisors. Mr. Taylor has written extensively and won numerous awards, most recently the Hayek Prize for his 2013 book “First Principles.”

Professor Taylor opened the talk by mentioning that he had just returned the previous day from testifying before Congress as part of a panel of economists. In an unusual step, Congress asked the panel to provide their point of view after hearing Federal Reserve Chairman Janet Yellen’s semi-annual monetary policy testimony.

Next, Taylor reviewed several slides noting the economic trends since the 2008 recession, compared to relevant historical periods, and noted that fiscal, monetary and political policies have become much more unpredictable. His thesis is that the erratic, inconsistent policies have caused, in part, the weak recovery.

The most memorable graph he presented showed the astonishing ballooning of the Fed’s balance sheet as a result of the Quantitative Easing (QE) purchases. With the unprecedented purchases, there is much uncertainty around the method, timing and economic effect of reducing the reserve balances. The Fed “taper” is merely scaling back purchases, and of course is a first step to returning to past reserve levels. Several attendees asked about possible market impacts, but much is unknown and speculative at this point.

Fed’s balance sheet as a result of the Quantitative Easing (QE) purchases

All-in-all, the discussion was very informative and thought-provoking - another memorable FWSF event and wonderful start to a great 2014 programs season.

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