Like skiers, our ability to anticipate what is likely to be around the next turn will make the difference between a smooth run down the mountain or an unpleasant spill.

Yankee Stadium is a natural venue for another lesson: You won't succeed all the time. Even Ruth, Gehrig and DiMaggio failed most of time when they stepped to the plate. Finding the right path in life, more often than not, involves some missteps. My Federal Reserve colleagues and I experienced this as we struggled to address a financial and economic crisis that threatened the global economy. We brainstormed and designed a host of programs to unclog the plumbing of the financial system and to keep credit flowing. Not everything worked but we kept at it, and we remained focused on the task at hand. I learned the lesson during this period that one's response to the inevitable setbacks matters as much as the balance of victories and defeats.

MODERATOR: And a closing question, this one submitted by Steve Sanger, former CEO of General Mills and a member of our economic club board. How would you rate actor Paul Giamatti's portrayal of you and, for that matter, the portrayal of other principals in the recent movie "Too Big to Fail"?

(LAUGHTER)

BERNANKE: I didn't see that movie; I saw the original.

(LAUGHTER)

(APPLAUSE)

BERNANKE:  I think Paul Giamatti is an excellent actor.  And, in fact, I met him. He asked to come meet with me, so I had him over for lunch at the Federal Reserve. And -- and the first thing I found out about him was that his father was the commissioner of baseball, Bart Giamatti. So what do you think we talked about for the whole lunch?

It concerns me that liquidity is omnipresent on bank and corporate balance sheets, and yet it is not being used to hire American workers.

It also concerns me that the most recent Lipper/AMG financial market data show year-to-date flows into virtually all asset classes except money market funds. The flows are strong into every category: high-risk to low-risk bond vehicles, taxable and nontaxable, domestic and external, fixed and floating rate, and, of course, commodities. Margin debt remains shy of 2007 highs but is fast approaching levels that prevailed before the NASDAQ implosion in 2001; in fact, margin-account debit balances as a percentage of the market capitalization of the S&P 500 now exceed the precrash level of 1987 and 2001.

Junk yields are at their lowest levels since October 2007. And the leveraged buyout market is back to paying 2006 levels of EBITDA (earnings before interest, taxes, depreciation and amortization) of 6 to 8.5 times, with the recent announcement of Carlyle Group’s reported 11 times EBITDA purchase of Syniverse Holdings echoing the peak of the precrash craze. As you know, buyout people do not typically acquire companies with a plan to expand the workforce, but instead with an eye to tighten operations, drive productivity, rejigger balance sheets and provide an attractive payback, usually in shorter time than under normal corporate horizons. And the corporations I talk to that are eyeing possible acquisitions with their surplus cash and ready access to the credit markets are not given to thinking of strategic acquisitions as a way to expand payrolls.

In sum, scanning the business landscape and the conditions of the financial markets, I concluded as a golfer that the greens are playing very fast and must be approached with great caution. At a minimum, I concluded, the committee would need to be very careful in how we calibrated our next strokes, lest we overplay it.

I fully understand the theoretical impulse to drive long-term interest rates to lower levels in hopes of stimulating loan demand and challenging the propensity for economic actors to hoard rather than invest. Given that foreign exchange markets react to interest rate differentials between countries, one effect of engineering lower rates would be to devalue the dollar, presumably to create demand for exports. The ultimate objective would be to advance final demand, generate employment for American workers and revive output.

 suspect that most of you have heard that the recession is over and I also suspect that few of you feel like the recession is over. The unemployment rate is still high nationally and still rising in West Virginia. Perhaps the best analogy is to taking a hard foul on the way to the basket; the recession (the way economists define it) is over when you hit the floor. But you don't feel like it's over until you get back up on your feet, and even then you may have some lingering bruises. Well, the consensus is that we hit the floor last summer and have been in the process of getting back on our feet ever since. That represents recovery, but the pain is still with many of us to be sure, and we are a long way from a full recovery.

Good monetary policymakers, like good hockey players, must be forward-looking in their actions. Setting policy that is appropriate for where the economy is today, or has recently been, is not likely to deliver the kind of economic outcomes we desire. Anticipating where the economy is headed is important because monetary policy actions affect the economy with long and variable lags. The major impact of policy often comes only after several quarters, or sometimes several years.

My forecasting record is about the same as the win-loss record of the Washington Nationals.

From the Q&A session, as reported by the Washington Post's D.C. Sports Blog

After all, as the Nobel laureate Niels Bohr once said (in a comment later attributed to Yogi Berra), "prediction is very difficult, especially when it's about the future."

Today, we central bankers are grappling with globalization—the freer flow of goods, services, money, ideas and people across national borders. Its present incarnation owes a great deal to the revolution in information technology. Faster, cheaper and better communications are breaking down barriers to international business and knitting the world's economies closer together faster than the New York Mets can blow a pennant race. 

 I am guessing, however, that you, being in the real estate business, probably know that last Tuesday the Federal Open Market Committee (FOMC) held a meeting and decided to cut the federal funds rate by one-half of 1 percent, an event that seems to have given rise to almost—but not quite—as much chatter as recent developments affecting the sports memorabilia collection of O.J. Simpson.    

The fact that there are some very wealthy people doesn't necessarily make me or you worse off if they're creating value. You know, I'm a baseball fan. I like to watch Alex Rodriguez. And I don't particularly care that he earns a lot more money than I do.

But we do need to make sure that people throughout the income scale have opportunities to raise their own standards of living and make progress in our society.

And that's why I've advocated the principle of trying to give people opportunity through education, through skills, through support during periods of transition between jobs to make them more productive and more able to deal with the disruptions that come with a globalized economy.

In fact, setting the federal funds rate target is a little like throwing a forward pass in a football game.  Any good quarterback knows that you cannot just throw the ball to where the receiver is when you see him.  You have to throw the ball to where you thinkhe will be by the time the ball gets downfield.  So it is with setting the federal funds rate.  It is not just where the economy is positioned today that matters, but also where we think it is headed.  That's a little free advice for Ben Roethlisberger. 

The economy is near full employment with real GDP tending toward trend-like growth. Core inflation is within a reasonable range but a bit on the high side. Needless to say, it’s fitting for Chairman Greenspan to leave office with the economy in such solid shape. And if I might torture a simile, I would say, Mr. Chairman, that the situation you’re handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot.

Asked specifically his opinion of the baseball analogy used by Dallas Fed Bank President Richard Fisher, Lacker refused to comment, saying that in his case he has not been able to think of an auto racing analogy.

We are clearly in the eighth inning of a tightening cycle.  We have the ninth inning coming up at the end of June.