I replied with an excellent exposition of monetary and fiscal policies, the accelerating inflation rate, all of the mistakes that were being made, who was doing what to whom, and more. restaurant sometime in 1984, Herb asked me what was happening in the Israeli economy. While we were having dinner in a Washington, D.C. A second Herbism is extremely useful when discussing economic growth or interest rates: "The difference between a growth rate of 1 percent and a growth rate of 2 percent is 100 percent." I have many more but will stop at three. The most famous one is "If something cannot go on forever, it will stop," which comes in very handy when trying to persuade someone to stop implementing policies that are driving their economy straight into a stone wall. Rather, let me tell you a bit about Herb via what should be called Herbisms. But tonight is not the occasion to retell that story. I believe our team made a real contribution to the success of the Israeli stabilization program that began in mid985 and which is now recognized as a critical turning point in Israel's economic history. The experience of working for George Shultz, in partnership with Herb, was not only wonderful, but it also changed my life, for after that I had the policy bug. By mid984, the advisory team consisted of only Herb and me. Herb was 67, wise, witty, and experienced, and I was 40 years old, with a lot still to learn. Herb Stein, formerly chairman of the Council of Economic Advisers under Richard Nixon and Gerald Ford, was also on that team. My first real-world involvement in economic policy began late in 1983, when I was invited by Secretary of State George Shultz to join a small team to advise him on the stabilization of the Israeli economy, then suffering from triple-digit inflation and other ills. But before turning to that topic, I would like to explain why this is a special occasion for me. It is a pleasure to speak to you tonight and an honor to deliver the 2015 Herbert Stein Memorial Lecture.My subject tonight is central bank independence. I am grateful to Kurt Lewis, Ellen Meade, and Jonathan Rose for their help in preparing this speech.
The views expressed here are my own and not necessarily those of others at the Board, on the Federal Open Market Committee, or in the Federal Reserve System.
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