The citizens of Texas and the Eleventh Federal Reserve District operate under the same monetary policy as do the rest of our fellow Americans. We have the same mortgage rates, pay the same rate of interest on commercial and consumer loans, and earn returns and borrow at the same interest rates as do our brethren in the rest of the country. Which raises an important question: If monetary policy is the same here as everywhere else in the United States, why does Texas outperform the rest? The answer is no doubt complicated by the fact that we are blessed with a comparatively great amount of nature’s gifts, a high concentration of military installations and other “unfair” advantages. But one cannot avoid the conclusion that one of those “unfair” advantages is that we have a Legislature, based here in Austin, that under both Democrat and Republican governors has over time crafted laws and regulations that encourage business expansion and job creation. They have conducted the fiscal affairs of the state so as to maintain confidence in the future. One might draw two lessons here: first, that Germany’s finance minister, Wolfgang Schäuble, is right when he says, “If you want more private demand, you have to take people’s angst away” by having responsible and disciplined fiscal policy;4 and second, that fiscal policy either complements monetary policy or retards its effectiveness as a propellant for job creation.
I attributed this in significant part to prudent fiscal and regulatory policy, underscoring that this not only facilitates job and overall economic expansion in Texas, but is the underpinning of confidence. I would suggest that  7  See the FOMC’s /20120125c.htm. 8  “Prosperity at Risk: Findings of Harvard Business School’s Survey on U.S. Competitiveness,” by Michael E. Porter and Jan W. Rivkin, Harvard University, January 2012. 6  BIS central bankers’ speeches  statement,  Jan.  25,  2012,  www.federalreserve.gov/newsevents/press/monetary  now is the time for prudent fiscal policy to be enacted by a Congress that on both sides of the aisle has for far too long, under both Republican and Democratic presidents, been shamefully negligent of its responsibility. Today marks the 1,009th day without an agreedupon federal government budget. The Congress has found it easier to not agree on a budget than to go about correcting fiscal imbalances that drive the nation’s growing indebtedness. Our political leaders’ misfeasance exacerbates the “angst” that inhibits the confidence of consumers and job-creating businesses. My staff has found a wonderful sketch on YouTube that might best illustrate the behavior of Congress. Here it is: http://www.youtube.com/watch?v=Li0no7O9zmE. That sketch says it all. The Fed, the nation’s monetary authority, has clearly articulated its longer-run goal and policy strategy and has conducted itself with integrity by responding to the needs of the economy. In contrast, the fiscal authorities have conducted themselves with impunity: Their only long-term strategy is to pass the bill to our children and grandchildren.