First, globalisation has strong direct effects on price movements of certain goods and services, and in this sense can be thought of as a shock exerting a strong influence on relative price dynamics. On the one hand, increasing trade openness seems to have had a downward impact on manufacturing price developments over the last decade or so.
At the Federal Reserve, we are working with our fellow regulators to realign the restraints and incentives – the guard rails and HOV lanes, if you will – of the regulatory system to promote use of the high road and warn bankers off of the low roads where the rocks are falling, the curves are sharp, and many calamitous accidents happen.