well, the way that that -- there is an arrogance to the intelligence community as well, intelligence community as well, which is also rather insular. the message that many americans receive is an impassioned, emotional, we are protecting you, how could you possibly criticize us? that is the message, without much substance to it, and with a lot of hypocrisy. for example, in our response to the drug trade, and our response to money laundering and these other issues that the intelligence community, chemical weapons, message -- weapons of mass destruction, issues with which the intelligence community ought to be taking greater responsibility for. >> well, first of all, it is the intelligence community, not the omnipotence community. we cannot expect them to be

right about anything -- everything all the time. that would be unreasonable. second, what you describe as the arrogance of the intelligence community, that is the appropriate place for politicians to be talking about oversight. to be discussing the mechanisms of oversight that already exist inside a free market or a free country like the united states. if they think there is insufficient oversight, then there is a legal redress. that is a good debate to have. a debate that should be perpetually be happening. when it comes to what i described as the arrogance of the media, i don't by any means mean the whole media. you know exactly who i am referring to. there are huge elements of the british media who are completely outraged at the snowden

allegations and the way in which "the guardian" newspaper in particular was willing to set them out and are angry about how the guardian did not face the wrath of the law that an individual citizen would have for that level of disclosure. there is quite immediate debate going on within their. when i say we, i do this instinctively because i believe that the three, and i mean this in the classical, small l, british liberal sense, the democrats of the world are united by our values. we are the ones at risk from those who hate our freedom, hate our democracy, hate our liberty. at some point we have to grasp the fact that there are those out there who hate us not

because of what we do, but because of who we are. it is who we are, what we have in common. it is that shared history that we need to protect. i am a huge fan of the united states. the concept of american exceptionalism, it is not that americans are exceptional, but that the constitution allows ordinary people to become exceptional or act exceptionally. that is the repository of the freedoms we enjoy in the western world, which is why it is so important that this debate be focused in the right direction. we cannot afford an introspective and inward looking america in a world where the

external threats have proliferated. because the threats are not just to you, but to us, to weed together. i think that that is why we have got to have solidarity when it comes to the security debate. >> if miranda had been caught in heathrow with 63,000 blood diamonds, he would have been arrested. >> especially if his plane ticket had been put -- had been paid for via national newspaper. different questions might have been asked. very good analogy. >> why was he not arrested? >> he was arrested, of course, under the terrorism act of u.k.. what was the reaction of the press? to say -- isn't that great? our security system has intercepted someone carrying top-secret files that would blow apart security?

the reaction from the left of the media was to say that this was an unwarranted intrusion into the freedom of the press. first of all, we were told that maranda was a journalist. then we were told that he wasn't a journalist. that we were told he was the partner of a journalist doing some couriering of information on behalf of a journalist because the editor told him to regard electronic communication is safe. we are entering into some sort of alice in wonderland political existence when we get into this particular element of the debate. here was someone illegally carrying 58,000 files of security information from one foreign country through heathrow airport to take it to another country to break, in my view,

our terrorist legislation, giving out the names of operatives to who those who. and we are supposed to be embarrassed that we were angry about it. >> should he have been released or kept in top -- kept in custody and prosecuted? >> as a politician is -- it is not my place for me to comment on law enforcement in the united kingdom. but i think i have made myself relatively clear. about what i think should happen. i think that there is a very serious national issue to be confronted here. what has become the conclusion? that it is ok. we came to this conclusion that in the name of journalism, what if we came to the conclusion that it is perfectly permissible to operate in this way in the future? where does this lead us? where does this leave the ability of our security services

to operate? what will be the relationship between the state, citizens, and media in the future? this is a vital debate in which we are now engaged. we need to get it right. i would venture to say that the greater intellectual input that we have seen to this point. >> it has been suggested that edward snowden, by some fairly high-level people in government, that we should consider an amnesty deal for him, where he would turn himself in, hand back the documents. do you think that would be a good idea? would it be counterproductive? >> on the documents? what are we going to do? ask china and russia to give them back and expect them to do so without having copied them? i mean, get real. the damage has been done.

this is a man who has betrayed the trust and confidence placed in him by his own government and, by extension, his own people. he has done goodness knows what damage to the security of his country and the allies of his country. he has been willing to be best buddies with some of the most dangerous enemies that the countryy has. he has made it clear where his sympathies and values live. and we want to give him an amnesty? please. >> one more question from the audience. >> there you go. >> thank you. dana milbank. i want to ask both of you to say whether you think "the guardian" and "the washington post" or wrong to publish those initial revelations from edward snowden?

>> the press are perfectly at liberty to discuss the extent of surveillance. we have laws in which those who have the initial data can access that data. within the parameters of the law that we have, it is a good debate to have. what is quite wrong and unforgivable in my view is what i said earlier, to set out the means by which our security services go about their business. even worse, the names of those whose lives are on the line to carry out that work on behalf of our respective countries. and when you get, as in the case of the guardian, the unwillingness to hand back the information, which the

government said they have no right to possess, that they are wrong to hold onto, and are incapable of protecting, sufficiently, and making themselves a target for any of those who would lock -- want to have that, who then have the information they possessed destroyed on the premises, on the basis of a secure arrangement with the government, and while they're doing so, carrying the same information to the next jurisdiction by a human mule, i really do worry about the ethics and integrity of that. i have real problems being able, in any way, as a democrat, to defend that as freedom of the press. >> i would add ird published in the washington post saying they should not have published those documents and that it was a

violation of the law. the law is very clear. it is not just a matter of an individual, the government exposing that. the publication is a violation of the law. whether it would ever be prosecuted is another question, but i certainly think it is incredibly damaging to do that. >> finally, it boils down to those of us in the political sphere. are we willing to defend to our last breath the security of our people? are we willing to defend democratic institutions, the faith placed in us by our own people, including the oversight, that we have a responsibility to have on our security services, and finally, are we willing to uphold the law at any cost in any inconvenience to the political classes? that is the gauntlet throat and down to us.

>> i would add at the end of that, as dr. fox pointed out, you can make an argument some of the revelations have sparked a valid debate on civil liberties. revealing the fact we have figured out a way to break into al qaeda's computers when they are not connected to the internet, which has no implications for civil liberties, how does that help national security or advance civil liberties? so many of these have nothing to do with civil liberties. when you talk about those, there is no justification for publishing them in the paper. with that, we are at 11:00. thank you for an interesting discussion. [applause] [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute]

>> coming up this morning, president obama in pennsylvania with a job-training initiative. followed by federal reserve change in it you are in speaking about the economic recovery at the economic club of new york. on the next "washington journal ," reed abelson of "the new york times" looks at medicare payouts. after a recent report. mandelbaum discusses

his new book. facing about the rancher with the u.s. department of land management. 7:00 a.m. eastern on c-span. grumman's president and ceo will discuss defense spending at the economic club of washington dc. see the event live at 8:30 a.m. eastern on c-span2. cryptology goes back to the beginning of human history. we do not quite go back that far. we have some interesting artifacts that help people to understand how long people have been making and breaking codes and have had a need for cryptology. when we talk about the united

states, it is important to note that the making and breaking of codes has been part of america even before we gained our independence. one of our most precious artifacts is referred to as the jefferson cipher device. truth in advertising, it is very notrtant to note that we do have any definitive, conclusive evidence that this particular device belonged to thomas jefferson. there are some interesting facts about it. one, this device was found in an antique store very close to marcello. abilityrs to have the to cipher french and english, jefferson was the ambassador to france. there is a drawing of a device very similar to this in jefferson's private papers. we cannot say for sure that jefferson owned it. what we can say is that this is an excellent example of how

thele use cryptology in 19th century. >> from the nsa's national crib logic museum. making and breaking secret codes. and 10:006:00 eastern, this week it on c-span3. july, a panel discussion on the future of conservatism. among the speakers, do 11 -- you've al -- among the speakers, yuval levin. >> in one way, that ms. describes the model. a changeo think about we are facing and another reason why some people say this is not the america i used to know is that our idea is shaped by a postwar america that could not possibly come back and did not

exist before the war. it is never going to exist again. war andy that won the whilethened its economy its competitors burned themselves to the ground. they could contain in itself the growth of global capitalism. all boats did rise to some extent. defines our expectations. in a way that is going to need to change. it is going to be very difficult to change that. experience last year of reading charles murray's new book right after reading paul krugman's. they start in the same way. they have an introduction that is pure nostalgia for the early 1960's. they are right, those were years that we should miss. politics is far too oriented around how can we bring that back rather than thinking about what is the world look like now and how can we make the most of

american strength today. both parties are failing now. that is not just a conservative problem. both parties are intellectually exhausted in a way that is very bad for the country. >> there is 1950's nostalgia. >> big labor was buried. there was a lot of economic dynamism. that is true. it does not mean we could do it today. >> what is the future? the 60's were good to me. [laughter] you guys do not remember, you were busy on the internet. >> technically we were not born yet. >> that's why i enjoyed them. [laughter] on themore of the panel future of conservatism and i used to on c-span -- tonight at 8:00 eastern on c-span. president obama and vice president biden traveled to pennsylvania wednesday to speak about jobs and the economy at the community college of

allegheny county in oakdale. he announced $6 million in competitive grants, training, a pressure programs. >> good to be here with you and the president. america is better position than any country in the world to to the 21stld in century. the rest of the world does not have, as we used to say in scranton, "not a patch on our jeans." theyu ask companies why are coming back, american companies are coming back. an outfit in boston that surveys american manufacturing companies in china. they say what are your plans?

this year, 53% of american they are in china said either planning on coming back to the u.s. or thinking about it. investing, hiring here at home. that is because of you. america has the best qualified workers in the world. and i have been friends for a long time. we got tired of hearing about how american workers were not as productive. studies show american workers are three times as productive as workers in china. we want china to do well but we have the best workers in the world. we have the most innovative ideas in the world. you heard for a long time how throughout the world, particularly in the far east, they have educated x as many engineers as we have, three times or four times. there is no products with their names on it and they are coming home. hearingad it up to here

about american workers and american manufacturing. as the last 10 years, senator casey can tell you, i am talking about there is not a reason we cannot be the manufacturing capital of the world. none. zero. none. [applause] most trade have the workers, we have the best laws and protections. your intellectual property gets protected, our court system . you have all heard about the marsalis shale, there is an energy boom. inis cheaper to manufacture the u.s. than it is in europe and or in asia. the economy is at a crossroads. in oure other periods history. we face tremendous opportunities but we face challenges, as the president will speak to.

as a consequence of that recession that brought us that close to a depression. our workers are up to the task. but the companies, the education system, every level of government -- we need to rethink how we are helping move. to these new opportunities. it is a different skill set that is going to be required. required now and over six out of 10 jobs in the next 10 years are going to require some certificate or degree beyond high school. that is where the president and i are here today. the point is simple -- the backbone of this country is a strong and thriving middle class. that is not a hyperbole or because i am a scranton kid. it is true. it has been the backbone of america, the distinguishing feature of our economy over the last 150 years. canre here to show how we help more people find a path to good paying jobs, middle-class

jobs in high-growth industries from information technology, energy, manufacturing, health care. it is not just manufacturing. let me define what i mean by middle-class. our economist administration 51,000gue whether it is middle-class is an ideal. it is about being able to own your home and not rent it. send your kid to a part you know they're going to come home safely. send then to a local public school and know if they do well they can qualify for school after high school. [applause] about being able to take care of your parents and hope you can plan enough so your kids will never have to take care of you. that is what it has always been about. [applause] so fact of the matter is,

many people over the last two decades have fallen out of the middle class. a lot of people you grew up with and live with. many more generations need to find a path to the middle class. the president and i are committed to. spending the rest of our time in office making sure that the aperture of the middle class is open wider. and that there are really good, decent, good paying jobs. i'm proud to introduce a buddy of mine. he is my good friend and also my president and i am proud to serve him. this is a guy who wakes up every morning -- i spent a lot of hours a day with the president. every single waking hour is about how can we make life better for hard-working to doans who are ready

whatever it takes to provide for themselves and their families. ladies and gentlemen, let me introduce the president of the united states, barack obama. [applause] plays] >> hello, allegheny county! [applause] joe and i decided it was time for a guys' trip. [laughter] actually, michelle and jill

wanted us out of the house. [laughter] so we decided to take a little roadtrip. and we are thrilled to be back here with a lot of good friends and folks who aredoing terrific work every single day. we brought with us some people who are doing some important work, trying to make sure that we're building on the kind of success that we're seeing here-- first of all, commerce secretary penny pritzker is here. give penny a big round of applause. [applause] we've got a great friend and anoutstanding senator -- bob casey in thehouse. [applause] congressman mike doyle is here [applause] one of the biggest steelers fans we've got. [laughter] we've got county executive rich fitzgerald here in the house. [applause] outstanding mayor of pittsburgh,

bill peduto is here. [applause] and your college president, quintin bullock is here. [applause] and of course, all of you are here. [applause] yeah! yeah! [laughter] now, we're here because ccac is an outstanding model of the kind of job-driven training we are trying to encourage all across the country. and joe and i just spent some time checking out the machines and motors that are being used here to train folks in mechatronics. now, i have to say that before i camehere i didn't know there was such a thing as mechatronics. [laughter] sounds like something that godzilla would be fighting. [laughter] it turns out it has to do with engineering, how stuff works.

and we saw firsthand everything that you are doing to train more workers for new jobs and better jobs. jobs companies need to keep growing. and what we want to do is we wanted to replicate your model across the country. you are doing something right that is making a difference in people's lives. and we want to spread the word. [applause] so that's why we're here today in allegheny county, because i'm taking some new action to expand this kind of job-driven training to all 50 states. and joe talked a little bit about why we have to do this -- because in today's economy, it's never been more important to make sure that our folks are trained for the jobs that are

there and for the jobs of the future. now, we've spent the past five and a half years fighting back from the worst economic crisis in our lifetimes. the good news is our economy is growing again, our businesses are creating jobs. we have created nearly 9 million jobs over the past four years, we have cut our deficit by more than half. our manufacturing sector that used to be losing jobs, hemorrhaging jobs, is now adding jobs for the first time since the 1990's. the first time since the 1990's. high school dropout rates are going down. college attendance rates and graduation rates are going up. our truth -- our troops are coming home. we're seeing an energy boom across the country, and more than 7.5 million people have been able to sign up for health care, many for the very first time, through the affordable care act. [applause] and 7.5 million people, by the way, is about the number that it

would take to fill up heinz field 115 times. so there are a lot of good trends that are taking place. and that has to do with the great work that our vice president is doing. it has to do with the great work that folks like mike and bob and .ichard our doing and your outstanding mayor in pittsburgh and all he is doing to help transform the economy there. but here's the challenge -- and a lot of folks here know it. a lot of people do not feel that progress in their own lives yet. so, the stock market is doing great. corporate profits are soaring. folks at the very, very top are doing better than ever. but too many americans, if they're lucky enough to have a job, are working harder and harder just to get by, much less to get ahead. for too many middle-class americans, it feels as if the

same trends have been going on for decades are continuing. wagese working hard, but flat-line, incomes flat-line, the cost of everything else is going up. so we've got to reverse those trends. we've got to make sure that we have an economy that is not just growing from the top down -- because it does not really grow when it's just from the top down. we've got to have an economy where it grows from the middle class out in from the bottom up. and everybody has a chance. that's the idea of america -- if you work hard, you can get ahead. that's the promise at the heart of this country. if you're responsible, you're willing to put in some sweat, you can get ahead. you may not be fabulously wealthy, but you can have health

care you can count on, maybe take a vacation once in a while. just the basics and knowing that you're part of a community that is growing for everybody, not just some. restoring that idea is the defining issue of our time. joe and i truth is, were talking about this the other day. we sometimes sound like a broken record because we have been talking about this for 6, 7, eight years -- ever since we have been in public office. but it is more urgent than ever now that we move forward and we know what to do. we are pushing a four-part opportunity a general -- a four-part opportunity agenda. the first part is more jobs paying good wages. jobs in construction, infrastructure, rebuilding roads and bridges. putting people back to work. there is a lot more we could be doing.

number two, we have got to train more americans with the skills to fill the jobs that are there. just like you do here at ccac. tober three, we have got guarantee every young american a world-class education. number four, when people do have a job, we have got to make sure that job pays a decent wage and you have savings you can retire on and health care you can count on. [applause] these are the things we've got to be doing. you know it, i know it. that is what we put our unemployment rate down faster. it would pull our wages up faster. it's what we could do to create more jobs and economic security for a lot of families that have been reaching for it for years. and every single person you send to washington should be focused on that issue. that's what america needs right now. today, the reason we came here is to focus on that second part

of that agenda -- training americans with the skills that they need for the good jobs that are going to be here today and tomorrow. around here, you know better than most how in recent decades the economy hasn't always worked for middle-class families. you saw outsourcing. there was a time when finding a good job in manufacturing wasn't all that hard. if you were willing to work, you could go to the local factory, maybe the factory your dad was working in, and say, i'm ready to go, and they'd sign you up. and over time, the economy changed, part of it because of globalization, some of it because of new technologies. and you've seen, sometimes painfully, where technology shutters factories and ships jobs overseas, and even makes some jobs obsolete. but you know what, we're not going to reverse all those trends.

we can't stop technology. and you've got a global economy now where we've got to compete. we live in a 21st century global economy. jobs know no borders, and companies are able to seek out the best-educated, most highly-skilled workers wherever they live. and that's where the good jobs and the good pay and the good benefits is going to be. other countries know this. countries like germany, china, india -- they're working every day to out-educate our kids so they can out-compete our businesses. and each year, frankly, it shows that they're making more progress than we are. we are still ahead, we have still got the best cards, but they're making some good decisions. we've got to make those same decisions. and when it comes to training our workers, not all of today's good jobs require a four-year college degree, but i promise you, there's not a job out there that's going to pay a lot if you

don't have some sort of specialized training. so our best bet is keeping ahead in the skills race. and you see what happens when we put effort into making sure workers have new skills -- the education that's required for this 21st century economy. at a time when traditional manufacturing is back on the rise, pittsburgh is seeing new factories manufacturing new technologies across the board. and i know your county executive and your mayor and steel workers -- everybody is -- we're focused on bringing jobs back. and the good news is they're coming back. the problem is we're having trouble filling some of those jobs. i mean, there's been great progress in this area. you've earned a great nickname,"roboburgh," because you've got high-tech plants and workplaces that are adding jobs faster than workers can fill them. that's a good problem to have.

but we've got a lot of americans who are still looking for work or underemployed and not getting paid enough. that's where what you do here is making a difference. america has got a choice to make. we can do nothing -- which is the strategy that some folks in washington seem to have. or we can do what we've always done best -- we pull together, we fight back, and we win. [applause] that's what we do best. so earlier this year, i asked joe to work with penny pritzker and tom perez, our labor secretary, to lead an across-the-board reform of all of our federal training programs to make sure they've got one clear mission. train americans with the skills employers need. not something that looks good on paper, but doesn't give you a job. find out what are the jobs that need to be filled and make sure folks are being trained and matched to those good jobs.

we've got to move away from what our labor secretary, tom perez, calls a "train emperor a -- train and pray" approach. we train them and we pray that they can get a job. [laughter] because the problem there is students, when they go to a community college,they go to a four-year university, they're taking out debt, they're straining their budgets. we got to make sure that it pays off for them. so we need to take a job-driven approach. and that's what you've done here in allegheny county. that's what you're doing here. [applause] so we're rewarding high schools that redesign their curriculums to help students gain ready-to-work skills even earlier because there's no reason why you got to wait for college. our high schools could be providing more relevant education and making kids more job-ready. [applause] we are supporting partnerships

between employers and local governments and nonprofits to help unemployed workers who've been sidelined for too long, help them get the skills that they need, help to connect them to the jobs that require those skills. we're working with a bipartisan coalition of governors and mayors across the country to make job training partnerships a reality for more americans. but we could be doing a lot more. and i've asked congress to invest in serious programs that connect ready-to-work americans with ready-to-be-filled jobs. [applause] and in fairness, mike doyle, he's supportive of that and bob casey is supportive of it. but unfortunately, there are some other folks in washington that haven't acted yet. they haven't been getting the job done so far. and americans can't afford to wait. so today, i'm taking two significant actions that don't require congress.

[applause] that don't require congress. first, we've asked more community colleges to do what you've done here at allegheny, and that is to figure out what skills local employers are looking for, and then partner with them to help design the curriculums and to prepare the students for those jobs. we want a seamless progression from community college programs to industry-recognized credentials and credit towards a college degree. and today i'm announcing that we're going to award nearly $500 million to those institutions who are doing it best in all 50 states -- using existing money to create opportunity for hardworking folks like you. [applause] that's good. second -- and this is related -- we're launching a $100 million competition for what we're calling american apprenticeship grants. now, these are awards that are going to expand the kinds of

apprenticeships that help young people and experienced workers get on a path towards advancement, towards better jobs, better pay, a trajectory upwards in their careers. and apprenticeships are a way to link more americans to jobs in some of our in-demand fields, like it and health care. they let you earn while you learn. and sometimes it makes -- it's possible for them to also create college credits on the job, even as you're pursuing a degree or a better job. right now, nearly nine out of 10 apprentices -- folks who are in apprenticeships, they get hired when they're finished -- which makes sense, right? you get an apprenticeship you're there, , you're learning on the job. people see that you're serious about working. so nine out of 10 folks, once they get an apprenticeship, they get hired. and by the way, they make an average of $50,000.

so we're streamlining efforts by the department of veterans affairs and the department of labor to help veterans access their gi bill benefits for apprenticeships. businesses, unions, community colleges, nonprofits -- we're getting them to work with us as well. the uaw is joining with the big three and john deere and others to add nearly 2,000 apprentices. some of the biggest manufacturers are partnering with community colleges in north carolina and texas and california on high-skill training programs. and now we want to work with national industry associations to help partnerships like these take root all across the country -- so that anybody, in any city, any state, can earn the training they need to get the good jobs of tomorrow. so the bottom line is if you're willing to put in the work to get a job or earn a promotion in today's economy, america's job-training system should give you every possible chance. and you're doing it here. when we took that tour, we saw

young people and some not-so-young people -- i won't say who. i don't want to offend. [laughter] but these are folks who -- many of them were in a job right now, but they saw that it was a dead-end and they wanted to make sure that they could get a better job. some of them were just getting started. but either way, their investment and their effort was being rewarded. one person we met is a gentleman named tim wright. he was showing us some of the computer systems that folks are working on. now, tim worked as a shift laborer for 13 years, loading rail cars, moving equipment, working nights, working weekends. and he always had his eye on moving into industrial maintenance so he could repair and oversee the factory's equipment, but he couldn't pass the skills test. i love this about tim. he did not give up. he didn't say, well, i guess i

can't get to my dream. instead he started on this mechatronics training at ccac. so he'd squeeze in classes whenever he could, while he was still working his shifts. and after six months of hard work, he graduated as an industry-certified mechatronics technician. he re-took the test. he passed the test. [applause] today, tim is doing what he set out to do. [applause] so today he's working on a factory floor, making sure the machines do what they're supposed to do. he earns more money, he works better hours. he has more time to spend with his family. and i want to read what tim said here about this. he said, "that extra training made all the difference in the world. those were the skills i needed to get to the next level." so i couldn't be prouder of tim. those are the victories -- they

don't get a lot of publicity. tim's name won't be in the papers -- although now it may be because i just talked about him. [laughter] but that's what america is all about, each of us working to try to move forward. and by each of us moving forward, we all move forward. and then, we reach back and we help other folks. companies that are represented here today -- like alle-kiski and schroeder and aerotech -- they're helping. they want to help even more of their workers to take their skills to the next level, whether it's through a community college partnership like tim's, or working with organizations like new century careers here in southwestern pennsylvania. [applause] more workers getting apprenticeships. we know it works. and if it worked for folks like tim and some of the men and women who are standing behind me here today, who took the initiative to upgrade their skills and stay ahead of the

jobs curve and prepare themselves for a new job or a better job, then it can work all across the country. we want that for every american. everybody who works hard and takes responsibility deserves a chance to get ahead. that is what this country is built on. that's what the moment requires. that's what congress should be working on. [applause] that's what joe is working on. that's what i'm working on. that's what you're working on. and if we keep on working, we're going to move forward. thank you, everybody. god bless you. duthings got heated at wednesday between the andssadors of russia ukraine. each presented his version of the standoff between the two countries after the annexation of crimea. here is part of the exchange. interesting, it is not the first time we are witnessing this here. for some reason, some of our

-- colleagues's believed if there is an armed coup, it is better for it to be armed. -- it willays take always result in democrats taking power -- thomas jefferson will take office. when you see the people in office now, do any of them have a reputation as politicians who are democrats? you will not find any such individuals there. they are pseudo-democrats. have they done anything? have they done anything to forge something that would have the appearance of democracy in the rada, nothing but fights. they eject those who object to them. on the maidan you have military camps, no one has been disarmed. these democrats, having established no democracy in enforcee now trying to

democracy and law and order through the deployment of armed forces. iny are trying to forces southeast ukraine. this is virtual reality. colleagues referred to the elections of may 25 as being prepared. we don't know how this will pan out. what is our concern here? what i do have to agree with my ukrainian cogley, i don't member his exact words. there has to be an in-depth change as compared to the past. there has to be a break with the past.the ukrainian people are being asked to buy a pig in a poke. got elected a president, it is unclear what sort of authority he will possess. what sort of government will he preside? significant authority, or will the prime minister have more authority and more power? the elections will take place on may 25.

no, this has been all reversed. now these elections are deemed push forward. members of parliament are going to be elected as of democracy. is this building a new democratic ukraine? last but not least, the -- we ares in geneva preparing for them. if they are not undermined by some sort of action in southeastern ukraine, they will take place. our western partners -- is ukraine ready? are they going to be ready? this is a small secret to you. we sought various formats for involving representatives of the region. the authorities themselves are incapable. negative tose was the proposal of hours.

-- i am referring to the geneva meetings. a ukraine leads to that will engage on the path of normal development where all the regions will understand clearly what is awaiting them tomorrow. all the religious, ethnic groups will understand what their future has in store for them. then we will together look at the economic problems of ukraine. this is dialogue that we invite our partners to participate in. including in the letter by president putin sent to heads of european state. well, the thought comes to my mind that sometime there is no point in making comments. willussian colleagues stand by their position and their opinion and they will represent a situation the way they wish it to be seen. whichis virtual reality

our russian colleagues are demonstrating. everyone says one thing but they live in their own separate world. taly, whether you want this or you don't, you will have to participate in a discussion on the issue of crimea. this is ukrainian territory temporarily occupied. until it is returned to us we will continue to discuss it. we have seen the support demonstrated by the whole world to ukraine. that whenrtunate you're making your comments you are using words -- it is a shame your representatives -- the security council meeting with the crimean delegation headed by a human rights defender. jails for 15viet

years. he said what i said, let us repeat his position. position as lies and provocation. the permian -- the crimean tatars will consider that you see this as lies and provocation. i have no further comments. to thisng said previous was nothing more than manipulation and distortion which is well know for all of us. thank you for your patience. >> the white house said wednesday it has prepared new sanctions against russia. more talks are scheduled in geneva thursday between russia, ukraine, that eu, and the u.s.. see the entire two our un security council meeting at c-span.org.

thursday, chuck hagel and the polish defense minister hold a joint news conference to russian intervention and ukraine, u.s.-poland relations, and other topics. live coverage from the pentagon at 10:45 eastern on c-span. also, former british foreign ibandtary david mille and former u.s. ambassador to syria robert ford. live at noon on c-span. for over 35 years, c-span brings public affairs and from washington directly to you. putting you in the room at congressional hearings, white house events, briefings and conferences. offering gavel-to-gavel coverage

of the house. c-span, created by the tv cable industry 35 years ago and brought to you as a public service by your local cable or satellite provider. like us on facebook and follow us on twitter. federal reserve chair janet yellen spoke about the economic recovery at the economic club of new york meeting wednesday. this was her first speech at the organization since becoming fed chair. this is one hour. >> thank you, welcome to the 435th meeting of the economic club of new york. i am roger ferguson, president of the economic club of new york. we have had more than 1000 guest

speakers appear before us. establishing a strong tradition of excellence which we continue today. i would like to begin by members of our11 centennial society, who have contributed support to ensure a sound future for the club. thanks to the centennial members for helping the club continue to fulfill its mission into our second century. i would like to welcome our special guests. we have students with us from andtra university, cuny, manhattan college. our members have made their nce possible. janet yellen became chair of the board of governors of the u.s. federal reserve system on february 3. dr. yellen served as vice chair of the board of governors hired to her appointment. she is a professor emeritus at the university of california at berkeley.

presidently served as and ceo of the federal reserve bank of san francisco. and as chair of the council of economic advisor. dr. yellen graduated summa cum laude from brown university and received a phd in economics from yale. following the speech, club members will ask questions. chair yellen, we are pleased to welcome you back to the economic club of new york. the floor is yours. [applause] >> thank you so much, roger. nearly five years into the expansion that began after the financial crisis and the great recession, the recovery has come a long way. more than a million jobs have been added to nonfarm payrolls since 2009.

almost the same number lost as a result of the recession. industry,urgent auto manufacturing output has also nearly returned to its prerecession peak. stillthe housing market has far to go, it seems to have turned a corner. sign of how far the economy has come that a return to full employment is, for the first time since the crisis, in the medium term outlooks of many forecasters. it is a reminder of how far we have to go that this long-awaited outcome is projected to be more than two years away. will discuss how my colleagues on the federal open market committee and i view the state of the economy and how this view is likely to shape our

efforts to promote a return to maximum employment in that context of price stability. i will start with the fomc's outlook, which foresees a gradual return over the next two to three years of economic conditions consistent with its mandate. monetary policy discussions naturally be with the baseline outlook, the path of the economy is uncertain. and effective policy must respond to significant unexpected twists and turns the economy may take. my primary focus today will be on how the fomc's monetary policy framework has evolved to best support the recovery through those twists and turns. framework ishis likely to comply as the recovery

progresses. current outlook for continued moderate growth is little changed from last fall. somecent months, indicators have been notably weak. requiring us to judge whether the data are signaling a material change in the outlook. the unusually harsh winter weather in much of the nation has complicated this judgment. but my fomc colleagues and i generally believe the recent softness was weather related. the continued improvement in labor market conditions has been important in this judgment. the unemployment rate of.7% has fallen .3 percentage point since

late last year. broader measurements and those working part-time for economic reasons have fallen a bit more than the headline unemployment rate. labor force participation, which had been falling, has ticked up this year. inflation, as measured by the price index for personal consumption expenditures, has slowed from an annual rate of about 2.5% in early 2012 to less than 1% in february of this year. this rate is well below the committee's 2% longer run objective. many advanced economies are observing a similar softness in inflation. to some extent, the low rate of inflation seems due to influences that are likely to be temporary, including a deceleration in consumer energy prices, and outright declines in

core import prices in recent quarters. longer run inflation expectations have remained remarkably steady, however. we anticipate that it is the effect of transitory factors subside and labor market gains continue, inflation will gradually move back toward 2%. in some, the central tendency of fomc participant projections for the unemployment rate at the end of 2016 is 5.2 to 5.6%, and for inflation the central tendency is 1.7 to 2%. if this forecast was to become a reality, the economy would be approaching what my colleagues and i view as maximum employment and price stability for the

first time in nearly a decade. i find this baseline outlook quite plausible. of course, if the economy obediently followed our forecasts, the job of central bankers would be a lot easier. and their speeches would be a lot shorter. [laughter] alas, the economy is not often so compliant. so i will ask your indulgence for a few more minutes. because the course of the economy is uncertain, monetary policy makers need to carefully watch for signs that it is day -- diverging from the baseline outlook, and then respond in a systematic way. let me turn first to monitoring and discuss three questions i

believe are likely to loom large 'the fomc's ongoing assessment of where we are on the path back to maximum employment and price stability. the first question concerns the extent of slack in the labor market. one of the fomc's objectives is to pro meat a return to maximum employment. but exactly what conditions are consistent with maximum employment can be difficult to assess. thus far in the recovery and to this day, there is little question that the economy has remained far from maximum employment. so measurement difficulties were not our focus. but as the attainment of our maximum employment goal draws nearer, it will be necessary for the fomc to form a more nuanced judgment about when the recovery of the labor market will be materially complete. as the fomc state on longer term goals and policy strategy emphasizes, these judgments are

inherently uncertain and must be based on a wide range of factors. i will refer to the shortfall in employment relative to its mandate consistent level as labor market slack. and there are a number of different indicators of this slack. probably the best single indicator is the unemployment rate. at 6.7%, it is now slightly more than one percentage point above the 5.2 to 5.6% central tendency of the committee's projections for the longer run normal unemployment rate. this shortfall remains significant. and in our baseline outlook, it will take more than two years to close.

other data suggests that there may be more slack in labor markets than indicated by the unemployment rate. for example, the share of the work force that is working part-time but would prefer to work full-time remains quite high by historical standards. similarly, while the share of workers in the labor force who are unemployed and have been looking for work for more than six months has fallen from its peak in 2010, it remains as high as any time prior to the great recession. there is ongoing debate about why long-term unemployment remains so high and the degree to which it might decline in a more robust economy. as i argued more fully in a recent speech, i believe that long-term unemployment might fall appreciatably if economic conditions were stronger. the low level of labor force participation may also signal

additional slack that is not reflected in the headline unemployment rate. participation would be expected to fall because of the aging of the population. but the decline steep ended in the recovery. ened in the recovery. although economists differ over what share of those currently outside the labor market might join or rejoin the labor force in a stronger economy, my own view is that some portion of the decline in participation likely reflects labor market slack. lastly, economists also look to wage pressures to signal a tightening labor market. at present, wage gains continue to precede an historically slow pace in this recovery. with few signs of a broad based acceleration. at the extent of slack we see today diminishes, however, the

fomc will need to monitor these and other labor market indicators closely to judge how much slack remains and therefore how accommodating monetary policies should be. a second question that's likely to figure heavily in our assessment of the recovery, is whether inflation is moving back toward the fomc's 2% longer run objective as envisioned in our baseline outlook. at the most recent fomc statement emphasizes, inflation persistently below 2% could pose risks to economic performance. the fomc strives to avoid inflation slipping too far below its 2% objective because at very low inflation rates at first economic developments could more

easily push the economy -- adverse developments could push the economy into deplace. -- deflation. once it starts, deflation can become entrenched and associated with prolonged periods of very weak economic performance. a persistent bout of very low inflation carries other risks as well. with the federal fund rate currently near its lower limit, lower inflation translates into a higher real value for the federal fund rate. limiting the capacity of monetary policy to support the economy. further, with long-term inflation expectations anchored near 2% in recent years, persist tents inflation well below the expected value increases the real burden of debt for households and firms, which may put a drag on economic activity.

i will mention two considerations that will be important in assessing whether inflation is likely to move back to 2% as the economy recovers. first, we anticipate that as labor markets slack diminishes, it will exert less of a drag on inflation. however, during the recovery, very high levels of slack have seemingly not generated strong downward pressure on inflation. we must therefore watch carefully to see whether diminishing slack is helping return inflation to our objective. second, our baseline projection rests on the view that inflation expectations will remain well anchored near 2%, and provide a natural pullback to that level. but the strength of that pull in the unprecedented conditions we continue to face is something we must continue to assess.

finally, the fomc is well aware that inflation could also threaten to rise substantially above 2%. at present i rate the chances of this happening as significantly below the chances of inflation persisting below 2%. but we must always be prepared to respond to such unexpected outcomes, which leads to my third question. myriad factors continuously buffett the economy, so the committee was always be asking, what factors may be pushing the recovery off track. for example, over the nearly five years of the recovery, the economy has been affected by greater than expected fiscal drag in the united states, and by spillovers from the sovereign debt and banking crises of some

euro area countries. further, our baseline outlook has changed as we've learned about the degree of structural damage to the economy brought by the cries and is the subsequent pace of healing. let me offer an example of how these issues shape policy. four years ago, in april 2010, the outlook appeared fairly bright. the emergency lending programs at the federal reserve implemented at the height of the crisis had been largely wound down. and the fed was soon to complete its first large scale asset purchase program. private sector forecasters polled in the april 2010 blue chip survey were predicting that the unemployment rate would fall steadily. to 8.6% in the final quarter of 2011.

this forecast proved quite accurate. the unemployment rate averaged 8.6% in the fourth quarter of 2011. but this was not the whole story. in april 2010, blue chip forecasters not only expected falling unemployment, they also expected the fomc to soon begin raising the federal funds rate. indeed they expected the federal fund rate to reach 1.3% by the second quarter of 2011. by july 2010, however, with growth disappointing and the fomc expressing concerns about softening in both growth and inflation, the blue chip forecast of the federal fund rate in mid 2011 had fallen to 0.8%, and by october the forecasters expected that the rate would remain in the range of 0 to 25 basis points throughout 2011, as turned out to be the case.

not only did expectations of policy tightening recede, the fomc also initiated a new $600 billion asset purchase program in november, 2010. thus, while the reductions in the unemployment rate through 2011 were roughly as forecast in early 2010, this improvement only came about with the fomc providing a considerably higher level of accommodation than originally anticipated. this experience was essentially repeated the following year. in april 2011, blue chip forecasters expected the unemployment rate to fall to

7.9%, but fourth quarter of 2012, with the fomc expected to have already raised the federal fund rate to near 1% by mid 2012. as it turned out, the unemployment rate forecast was once more remarkably accurate. but again, this was associated with considerably more accommodation than anticipated. in response to signs of slowing economic activity, in august 2011 the fomc for the first time expressed its forward guidance in terms of the calendar. stating the conditions would likely warrant exceptionally low levels for the federal fund rate at least through mid 2013. the following month the committee added to accommodation by adopting a new balance sheet policy known as the maturity extension program. thus, in both 2011 and 2012, the unemployment rate actually declined by about as much as had

been forecast the previous year, but only after unexpected weakness prompted additional accommodative steps by the federal reserve. in both cases i believe that the fomc's decision to respond to signs of weakness with significant additional accommodation played an important role in helping to keep the projected labor market recovery on track. these episodes illustrate what i described earlier as a vital as respect of effective monetary policy making. monitor the economy for signs that events are unfolding in a materially different manner than expected, and it just -- adjust policy in response in a systematic manner. now we will turn from the task of monitoring to the policy response. fundamental to modern thinking on central banking is the idea that monetary policy is more effective when the public better

understands and anticipates how the central bank will respond to evolving economic conditions. specifically, it's important for the central bank to make clear how it will adjust its policy stance in response to unforeseen economic developments in the manner that reduces or blunts potentially harmful consequences. if the public understands and expects policy makers to behave in this systematically stablizing manner, it will tend to respond less to such developments. monetary policy will thus have an automatic stablizer effect that operates through private sector expectations. it's important to note that tying the response of policy to the economy necessarily makes

the future course of the federal fund rate uncertain. but by responding to changing circumstances, policy can be most effective at reducing uncertainty about the course of inflation and employment. recall how this worked during the couple of decades before the crisis. a period sometimes known as the great moderation. the fomc's main policy tool, the federal fund rate, was well above zero. leaving ample scope to respond to the modest shocks that buffetted the economy during that period. many studies confirm that the appropriate response of policy to those shocks could be described with a fair degree of accuracy by a simple rule linking the federal fund rate to the shortfall or excess of employment and inflation

relative to their desired values. the famous taylor rule provides one such formula. the idea that monetary policy should react in this systematic manner in order to blunt the effects of shocks has remained central in the fomc's policy making during this recovery. however, the application of this idea has been more challenging. with the federal fund rate pinned to near zero, the fomc has been forced to rely on two lists -- two less familiar policy tools. the first one being forward guidance regarding the future setting of the federal fund rate, and the second being large scale asset purchases. there are no time tested guidelines for how these tools

should be adjusted in response to changes in the outlook. as the episodes recounted earlier illustrate, the fomc has continued to try to adjust its policy tools in a systematic manner in response to new information about the economy. but because both the tools and the economic conditions have been unfamiliar, it's also been critical that the fomc communicate how it expects to deploy its tools in response to material changes in the outlook. let me review some important elements in the evolution of the fomc's communication framework. when the fomc initially began using its unconventional tools, policy communication was relatively simple. in december 2008, for example, the fomc said it expected the conditions would warrant keeping the federal fund rate near zero for some time.

this period before the liftoff in the federal fund rate was described in increasingly specific and as it turned out longer periods over time. sometime became an extended period. which was later changed to mid 2013, then late 2014, then mid 2015. this fixed calendar based guidance had the virtue of simplicity. but it lacked the automatic stablizer property of communication that would signal how and why the stance of policy and forward guidance might change as developments unfolded. and as we learned about the extent of the need for accommodation.

more recently the federal reserve, and i might add other central banks around the world, have sought to incorporate this automatic stablizer feature in their communications. in december 2012, the committee reformulated its forward guidance, stating it anticipated that the federal fund rate would remain near zero, at least as long as the unemployment rate remained above 6.5%, inflation over the period between one and two years ahead was projected to be no more than half a percentage point above the committee's objective and longer term inflation expectations continued to be well anchored. this guidance emphasized to the public that it could count on a near zero federal fund rate at least until substantial progress in the recovery had been achieved, however long that might take.

when these thresholds were announced, the unemployment rate was reported to be 7.7%, and the committee projected that the 6.5% threshold would not be reached for another two and a half years. in mid 2015. the committee emphasized that these numerical criteria were not triggers for raising the federal funds rate, and chairman bernanke stated that ultimately any decision to begin removing accommodation would be based on a wide range of indicators. our communications about asset purchases have undergone similar transformation. the initial asset purchase programs had fixed time and quantity limits, although those limits came with the proviso that they might be adjusted. in the fall of 2012 the fomc launched its current purchase program, this timex place italy

-- this time explicitly tying the course of the program to evolving economic conditions. when the program began, the rate of purchases was $85 billion per month, and the committee indicated that purchases would continue providing that inflation remained well behaved until there was a substantial improvement in the outlook for the labor market. based on the cumulative progress toward maximum employment since the initiation of the program, and the improvement in the outlook for the labor market, the fomc began reducing the pace of asset purchases last december, stating that if incoming information broadly supports the committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer term

objective, the committee will likely reduce the pace of asset purchases in further measured steps at future meetings. purchases are currently proceeding at a pace of $55 billion per month. consistent with my theme today, however, the fomc statement underscores that purchases are not on a preset course. the fomc stands ready to adjust the pace of purchases as warranted, should the outlook change materially. at our most recent meeting in march, the fomc reformulated its forward guidance for the federal fund rate. one of the main motivations for this change was that the unemployment rate might soon cross the 6.5% threshold. the new formulation is also well suited to help the fomc explain

policy adjustments that may arise in response to changes in the outlook. i should note that the change in forward guidance did not indicate a change in the committee's policy intentions, but instead was made to clarify the committee's thinking about policy as the economy continues to recover. the new guidance provides a general description of the framework that the fomc will apply in making decisions about the timing of liftoff. specifically in determining how long to maintain the current target range of zero to 25 basis points for the federal fund

rate, the committee will assess progress, both realized and expected, toward its objectives of maximum employment and 2% inflation. in other words, the larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal fund rate is likely to be maintained. this approach underscores the continuing commitment of the fomc to maintain the appropriate degree of accommodation to important the recovery. the new guidance also reaffirms the fomc's view that decisions about liftoff should not be based on any one indicator, but that it will take interest account a wide range of information on the labor market, inflation, and financial development. along with this general framework, the fomc provided an assessment of what that framework likely implies for the

path of policy under our baseline outlook. at present the committee anticipates that economic and financial conditions will likely warrant maintaining the current range for the federal fund rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the committee's 2% longer run goal, and provided that longer term inflation expectations remain well anchored. finally, the committee began explaining more fully how policy may operate in the period after liftoff. indicating its expectation that economic conditions may for some time warrant keeping short-term interest rates below levels the committee views as likely to prove normal in the longer run.

fomc participants have cited different reasons for this view, but many of the reasons involve persistent effects of the financial crisis. and the possibility that the productive capacity of the economy will grow more slowly. at least for a time, than it did on average before the crisis. the expectation that the achievement of our economic objectives will likely require low real interest rates for some time, is again not confined to the united states, but is shared broadly across many advanced economies. of course this guidance is a forecast and will evolve as we gain further evidence about how the economy is operating in the wake of the crisis in ensuing recession. in summary, the policy framework i've described reflects the fomc's commitment to systematically respond to unforeseen economic

developments, in order to promote a return to maximum employment in the context of price stability. it is very welcome news that a return to these conditions has finally appeared in the medium term outlook of many forecasters. but it will be much better news when this objective is reached. my colleagues on the fomc and i will stay focused on doing the federal reserve's part to promote this goal. thank you. [applause] >> thank you very much, chair yellen. and now, as is our tradition, two of our club members will conduct a question and answer session. our vice chair, senior investment strategist, and marty

feldstein at harvard university and a trustee of the club. abby, the first question is yours. >> roger, thank you, and madam chair, thank you again on behalf of everyone here for your decision to give this important presentation today in new york. clearly very clear and cogent remarks and yet another example of straight forward communication from the federal reserve. thank you for that. >> thank you. >> for my first question, i'd like to go back to the problem you discussed earlier and that is the vexing and long lasting nature of unemployment in the united states following the financial crisis. we see that beneath the national data which are improving, there is a very wide dispersian in labor market performance. -- dispersion in labor market

performance. big differences, for example, by geography in what some cities and some states are doing far better than others, and also a very dramatic difference by education. much depends upon how much education and vocational training a worker may have. what is the role of the federal reserve in addressing these aspects of unemployment? what other government policies might be helpful? and what other private actions might be helpful in finally getting unemployment back down to more comfortable levels? >> thank you, abby. i think you're absolutely right that the recovery in the labor market has been exceptionally slow. the financial crisis, i think, left us with a lot of head winds that the economy has been struggling to overcome. so we have indeed had a disappointingly slow recovery.

and our consistent expectations for a pickup in growth have been dashed over a number of years. and the labor market is behaving in some perplexing ways in showing patterns that are novel. i agree with the points that you mentioned, and i mentioned some in my own remarks. part-time employment that's involuntary is remarkably high. in comparison with any past recovery. the length of unemployment spells is higher than we've seen it during the post war period. and labor force participation, as i mentioned, has declined a lot. i think for our part you ask what role can the federal reserve play, and it is as i

emphasized to continue to use monetary policy and to adjust it in light of changing economic circumstances, as we have over all these years during the recovery to foster healing of the labor market, a return to so-called full employment. and i think that's the best contribution that we can make. i do think we are seeing very meaningful progress, although clearly we're not, the goal has not been achieved at this point. you asked me also what role the public and private sector can play. i think that we all know that there are problems in the labor market that run deeper than merely a weak economy. they're not just cyclical problems. we have seen a rise in inequality and pressure on wages at the middle and below of the

income spectrum, rising skill gaps in wages, at least going back to the mid 1980's. and economists of course debate exactly what the causes are of those unsettling labor market trends. and there are a lot of ideas that have been put forward, skill bias technological change, , trend in the global economy, and institutional changes. i think almost on anybody's list of what the private and public sector can do to address those disturbing trends would be greater training and education, and clearly there's a great deal that the public can do, and also i see state and local governments and private individuals obviously in making their own decisions about training are responding to those

differentials in ways that i think will be helpful over time. >> thank you very much for a very clear statement. as you've indicated, the fed has the two goals of low unemployment and price stability. and because inflation is now very, very low, fed policy is focused on reducing slack in the labor market and raising inflation to about 2%. but at some point, a stronger economy may bring higher inflation rates. would the fed be willing to raise the fed fund interest rate above the rate of inflation if the inflation rate begins rising above say 2.5%, even if there is still slack in the labor market?

>> so, let me emphasize that our commitment is two-sided. we don't want to see inflation run persistently below our 2% target. and we also don't want to see inflation run persistently above our 2% target. the fomc about two years ago wanted to make very clear that we have a very strong commitment to a 2% longer run inflation goal. and we for the first time issued a clear statement that 2% is our longer run inflation goal and we remain committed to it. this continues to be the case.

so although with inflation running at around 1%, at this point as i mentioned i think the risk is greater that we should be worrying about inflation undershooting our goal and getting inflation back up to 2%. of course the fomc absolutely will be committed to protecting inflation if it threatens to rise persistently above 2% as well. and i hope it's completely clear that while monetary policy is very accommodative at this point, and i've focused on the need to keep it so or to adjust it to make sure the recovery remains on track, as the recovery proceeds and healing occurs, it's obvious that we will need to tighten monetary policy to avoid overshooting our target.

and we're very focused on that, we, this is a judgment call that the federal reserve needs to make in every expansion. overshooting that goal, we've learned in past episodes, in past recoveries, can be very costly to reverse. that's something we don't want to happen, so yes we will remain very focused on removing accommodation when the right time has come. and i feel very confident that we have the tools to do that and also the commitment and will. and by making our objective of 2% longer run inflation very clear, we did that in order to be transparent and to give the public a way to hold us accountable for achieving that goal.

[applause] >> madam chair, the federal reserve has been doing its difficult work during the global financial crisis and the aftermath really in a global context. and as we look at the current and forward situation, the two largest economies in the world, that of the united states and the euro zone, seem to have some very significant differences. there are differences, for example, in the pace of economic growth, both cyclical and perhaps the long-term growth prospects, in which the united states seems to be in better condition. and there also seems to be big differences in the condition of bank balance sheets. in europe there has been the spillover of the sovereign debt crises, and some other factors.

how do these differences in growth and the current health of the financial system in the two regions complicate fed policy with regard to two different things, number one the decision on policies related to economic stimulus, but also policies related to supervision and regulation? >> so, i completely agree that some of the economic challenges facing europe and the united states are quite different. and because we are seeing differences in economic situations around the globe, it is likely that the process of removing accommodation will take place at different paces in different parts of the world. and this will be a challenging situation over the last year or

so we have been very focused on potential spillovers of policies and challenges that this differences in the likely pace of normization of policies pose for developing economies for emerging markets economies in a world where global capital slows respond to small shifts in policy and expectations about policy. we've seen that these shifting expectations have imposed some difficulties for emerging markets, particularly in managing policies. in the case of europe, obviously the european situation is one with very high unemployment. there's been a return to growth, but it's preceding at -- proceeding at a very modest pace at this point.

there are challenges that we don't face in the united states across the euro area of readjusting competitiveness across countries, and shifting current account balances among the countries in the euro area. and i think europe is being held back by adjustments in their banking sector and problems in the banking sector that i think we have a much stronger banking sector in the united states. you asked specifically about bank balance sheets and supervision. and regulation. we've been very focused, both the federal reserve and other regulators in the united states and globally working with our colleagues, to strengthen the financial system in the

aftermath of the crisis to make banking organizations stronger and to more broadly reduce systemic risks so that we are at less risk of a financial crisis. and i do believe that we're making very meaningful progress in that task. there's much more and higher quality capital and more liquidity in the u.s. banking system. we have raised capital standards very meaningfully, particularly for the largest and most systemic firms. and as my colleagues and i have mentioned, there may be some further changes that we will put into effect to raise capital standards. the large firms and banking organizations generally are well on the track to meeting those

higher capital standards. and my perception of the situation in the banking industry at this point is banks look to lend, they want to provide credit, and they're supporting the recovery. in europe i think the situation is different, but they've made very meaningful progress, i think, in trying to form a banking union that will be a pillar of strength in europe and euro area economy. they are working very closely with us to enhance capital standards, and to move forward with us to maintain a level playing field in terms of capital standards and regulations.

i think their economy, however, at this point is somewhat more constrained by the need of banking organizations to build capital. they've made quite a bit of progress, i think, toward forming a banking union. and the u.c.b. as you know is in the process of conducting an asset quality review and stress tests that those were steps that were very important for us some years ago, i think, in putting our banking organizations on the road to health and recovery. and i think they will be equally important in europe as well. >> thank you for the answer that you gave to my previous question about inflation. i found the answer very, very reassuring. i want to stick with the subject of inflation, and ask how you will decide how the federal reserve will decide that the risk of inflation, that is the risk of overshooting the 2% goal, is high enough to warrant

a significantly positive real fed fund rate, that is how will you make sure that you are ahead of the curve, not behind the curve? alan kreuger of princeton suggested that the short-term unemployment rate, that is the unemployment rate for those out of work for less than six months, might provide a good early indicator. and i wonder if you agreed with that, and if not, what you would look at to try to anticipate inflation going above the 2% goal. >> well, we will certainly be looking at a wide variety of indicators pertaining to the labor market, and of course directly to the performance of inflation, inflation pressures, and inflation expectations.

and one measure, as i noted in my speech, of labor market slack is wage pressures, that can translate into price pressures and be an early warning indicator of impending uptick in inflation. although the relationship between wage inflation and price inflation has been less close and less reliable in recent years. there is, you know, i indicated in my remarks that one of the questions about the economy we will be focused on pertains to the labor market and trying to assess just how much slack there is, and what the impact of the labor market is on inflationary pressures. and as you mentioned, alan kreuger's work, there is a line of research that suggests that it is mainly short-term

unemployment rather than long-term unemployment that has an impact on inflation. so it is conceivable if that line of thinking is right that even with unemployment high but short-term unemployment low, long-term unemployment high, if that line of thinking is correct, we could see that even with the unemployment rate by by historical standards, inflationary pressures would be rising because the long-term unemployed according to that reasoning are placing less downward pressure on inflation. now, i think it's premature, frankly, to jump to that conclusion that that argument is correct. and i've made some arguments in other remarks and they've given about why i think that the long-term unemployed are likely to move back more actively

interest the labor force, and and intohe labor force the job market and exert pressure on waynes and prices as the labor market strengthened. but clearly we will have to watch unfolding evidence and evaluate it with an open mind and very carefulfully in the months ahead to make the assessments that will be necessary. and i mentioned that there can be surprises, and one of the surprises we could see -- i wouldn't rule out, it not what i think is most likely, but would not rule out the possibility that inflation could rise to levels where we'd need to address it before we might expect at this point. so that is something we will be quite attentive to. it is not my, it is not what a anticipate will happen, but again the purpose of my remarks today is to emphasize that there can be a lot of twists and

turns. we need to be alert to what is happening in the economy, and to respond to what we see happening, and not a fixed idea that we perhaps held at some earlier time about what will come to pass. [applause] >> thank you, chair yellen, for these very insightful remarks and also the answers to the questions, thank you, abby and thank you martin for the questions. the next meeting of the club will be here at the marriott, on monday, april 28, and the speaker will be former chairman of the federal reserve system, alan greenspan. so thank you for coming today and do please enjoy your lunch. thank you very much. [applause] >> during this month, c-span is

pleased to reason -- present the winners in the student cam video documentary competition. question we asked students to base their documentary on was , what is the most important issue the u.s. should consider in 2014? eighth-graders from beverly cleary school in portland oregon want congress to make gun control the most important issue. >> hi, i'm henry. >> i'm becky. >> on daniel. >> there have been numerous past -- mass shootings.

>> we think the biggest issue congress should address is gun control. >> we first talked to a criminal psychologist about his opinion on gun control. >> beinga a criminal psychologist has caused me to be involved in cases involving firearms and has caused me to study the scientific literature that relates to violence involving firearms. in the course of that investigative study, what i have found is that -- several things. one, our society regulates the same way we regulate motor vehicles. even though there is a constitutional amendment that we

have a right to have a car -- there is not a constitutional rightment that we have a to have a car and there is one for owning a firearm, they are treated more as a privilege than a right. isally, whatever sentence becauset is greater firearms. cause violence. violent people cause violence. >> the compromise, the main one i would say, is to make background checks a little lengthier. to go more in depth on somebody that would have a mental illness.

although they do check them right now, i think that we could compromise on the fact that the --kground to get a firearm it may be a little harder in the future. control and iun support it because a number of gun deaths in the number of injuries in this country is completely an acceptable. we ashd change the way unless we change the way we handle guns and those deaths, this will remain the same. the number of those accidentally who tragically take , the number of people who commit suicide -- people really need to understand

that having a gun in your house presents a risk. >> about 30,000 people died by firearms last year. president barack obama presented his plan to prevent gun violence. improving the background check system. banning assault weapons and large magazines. creating stricter trafficking laws. increasing knowledge of the gun violence epidemic. >> my priority, i feel strongly about assault weapons and others that have military applications, not things that people need for hunting or if they want to use it for self-defense in their homes. that people with guns in their homes are more likely to be subjected to gun violence. the victims are very often family and friends. arms --ssue with file

firearms with larger magazine capacity is not one that the particular gun is anymore dangerous or more vicious or more of a problem than any other firearm that can hold a single round. is with the person behind the gun and their intent. >> i do think you can respect the second amendment and allow people to have a weapon to hunt or if they feel, despite the evidence, that they think they're safer if they have a gun in the house even though they're more like you do have a family member die if you have a gun in the house -- that is their choice. too think that we need firearmsthe range of that we allow people to have. how much they buy them and what they do with them. we need to treat gun violence

like a medical issue. county sheriff's association felt that gun control, and and of itself, would not solve the complex problems of extreme gun violence across this country. >> a hundred more? how can we possibly even guess how many? proposal for more armed guards and schools may be helpful in some instances but it falls far short of the strong, serious, comprehensive action needed to stop the kind of horrific tragedy that occured in newtown last week. >> the second amendment is a

very controversial topic in the u.s. it states that people have the right to keep and bear arms. is this still relevant in the 21st century? of the winning videos and to learn more about our competition, go to c-span.org and click on student cam. tell us what you think about the issues. poster comment on the facebook page or tweet us. wes bush will discuss defense spending at the economic club of sh