San Francisco Fed chief Mary Daly on the ‘virtuous cycle’ of economics


JUDY WOODRUFF: Now the story of a top economist
and how her journey from high school dropout to key policy-maker informs her decisions
today. Economics correspondent Paul Solman has our
profile of a leading figure within the Federal Reserve. One thing we must note: Fed officials do not
make public comments just before a meeting of the Federal Reserve Open Market Committee. That meeting is next week. But Paul did this interview well in advance
for our weekly segment Making Sense. MARY DALY, President, Federal Reserve Bank
of San Francisco: I will run in place because it’s chilly. PAUL SOLMAN: In Boise, Idaho, last month,
a small nonprofit with an unassuming, but lofty visitor. MARY DALY: Oh, this is cool. May I introduce myself? TRACY HITCHCOCK, CEO, Create Common Good:
Absolutely. MARY DALY: Hi. I’m Mary. (CROSSTALK) MARY DALY: Nice to meet you. PAUL SOLMAN: Mary Daly is the new president
of the San Francisco Federal Reserve Bank, responsible for, among other duties, monitoring
the economies of the nine Western states and Pacific territories. MARY DALY: If you don’t visit the areas, you
don’t really get all the information you need, all the different ways that firms and businesses
and individuals and households might interact. So you need people on the ground, like regional
Fed presidents, to go out there and learn. TRACY HITCHCOCK: Everyone in a black smock
is actually an employee. PAUL SOLMAN: That’s why CEO Tracy Hitchcock
was teaching her about Create Common Good, which teaches professional kitchen skills
to refugees and others facing hardships and looking for work. TRACY HITCHCOCK: We are a step along the way
for someone working to achieve their biggest dreams. And for every adult head of household that
graduates our program, their kids have tremendously better outcomes around health and education
and future employment. And that benefits everybody in Boise. MARY DALY: Well, as an economist, I always
tell people it’s a virtuous cycle. If we invest in each other, then other people
lift up, and they invest in others, and you create this virtuous cycle. PAUL SOLMAN: Mary Daly knows about hardship
firsthand. MARY DALY: I grew up in Missouri. My father was a postal worker. And when I was 15, he lost his job. My mom, she got some part-time work, but not
enough. Then both of them fell on ill health. My siblings moved in with my grandparents,
and I moved in with a friend. PAUL SOLMAN: And dropped out of high school? MARY DALY: Dropped out of high school because
my family is imploded essentially and scattered. And so I needed to think about, how do I just
make a living? So I just cobbled together different part-time
jobs, working in a donut shop, working at a deli, working at a Target, and living with
this family who let me stay with them, only charged me $5 a month. It was a way to let me keep my dignity, even
though they were completely helping me. PAUL SOLMAN: Also helping, a mentor, who gently
nudged. MARY DALY: She didn’t say, Mary, you should
just go to college. Be a president of the Federal Reserve Bank
of San Francisco. She says, maybe you can get a GED. PAUL SOLMAN: She got the GED. Her mentor then suggested a semester of college. MARY DALY: I actually never heard of college. PAUL SOLMAN: Never heard that there was such
a thing as college? MARY DALY: Didn’t know anything past high
school. Everybody in my experience had gone to high
school and then went and got a job. You might be a postal worker, what my father
was. You might get a union job as a bus driver,
or go work on the assembly line for McDonnell Douglas, when it was still in Missouri. PAUL SOLMAN: So, when she nudges you to take
a semester in college, you say? MARY DALY: Why? And then she says, well, you know, you’re
good in school. It’s good. You will have a lot of other opportunities. I had to tell her I couldn’t afford it. And she takes her checkbook out, and she just
writes me a $216 check. And I give it to the bursar, and I start my
adventure. PAUL SOLMAN: Longer story short, she graduated
from University of Missouri, earned a Ph.D. in economics at Syracuse University. And then the rest is history, sort of. MARY DALY: And then the rest is sort of history. Ironically, I trained in labor economics and
public policy. And I take a job in macroeconomics and monetary
policy. PAUL SOLMAN: But, for Daly, monetary policy
is a means to more personal ends: prosperity for as many of us as possible. MARY DALY: How many here think you will be
better off than your parents? PAUL SOLMAN: Measured by population and job
growth, in percentage terms, Boise is the star community in Daly’s district, the fastest
growing city in America, Idaho the fastest growing state. But as Daly learned in a series of interviews
she taped for a podcast she’s starting, “Zip Code Economies,” there’s still plenty of anxiety. MARY DALY: We’re the people making policy
right now for your future. And I would like to know what you want from
us. PAUL SOLMAN: Economics and finance students
at Boise State University. STUDENT: Boise’s a very competitive job market
right now. So, it’s like college graduates, we’re competing
with some of that California influx. And so what I want when I graduate this field
is to get a decent job here in Boise. MARY DALY: What makes you worry about your
future? STUDENT: For me, it would be economic uncertainty
as it relates particularly to the debt that the federal government carries, and also for
student loans and how these raises in the interest rate will affect, you know, the student
— the burden of student debt that we’re going to — we inevitably will carry. MARY DALY: Not that I know anything about
interest rate policy. (LAUGHTER) MARY DALY: I want to be clear. PAUL SOLMAN: Of course, Daly knows quite a
bit about interest rate policy. As president of the San Francisco Fed, she’s
a voting member of the Fed’s Open Market Committee, charged with setting short-term interest rates. MARY DALY: Monetary policy is the tool kit
we have for a strong, healthy and sustainable economy. PAUL SOLMAN: That means you’re — in one metaphor,
you’re steering a course between too hot an economy, too cold an economy. And you like to use hot and cold as the metaphor. MARY DALY: Exactly, yes, hot and cold or — and
so Congress has given us two goals, two mandates, and we call it the dual mandate. And one is low and steady inflation, and the
other is full employment. You want to have everybody who can work engaged
and wants to work, and jobs are there, and you want to make sure inflation doesn’t run
away, so that the value of the dollar doesn’t erode for people. PAUL SOLMAN: In trying to avoid too hot, the
Fed has raised rates six times since President Trump took office. That’s drawn the ire of a president dedicated
to the proposition of a hot economy. DONALD TRUMP, President of the United States:
My biggest threat is the Fed, because the Fed is raising rates too fast. PAUL SOLMAN: In late November, he attacked
Fed Chair Jay Powell. “So far, I’m not even a little bit happy with
my selection of Jay,” he told The Washington Post. What did you make of the president’s critique
of Chairman Powell, whom he, after all, appointed to the job? MARY DALY: My view on this is, I have responsibility
for the Federal Reserve Bank of San Francisco, for voting on monetary policy, for working
with my Fed colleagues to make the best monetary policy. PAUL SOLMAN: And you won’t answer that question. MARY DALY: I just don’t think of it. The great thing about the Fed is that we have
been given independence. There are no politics in the Fed. Who do you want to be five years from now? PAUL SOLMAN: Well, there are certainly no
politics at the work refuge Create Common Good, where Daly also recorded conversations
for her podcast. MAN: I’m Shawn (ph). I’m actually originally from Missouri, and
we moved out here. MARY DALY: Me too. (LAUGHTER) MAN: Awesome. PAUL SOLMAN: Shawn McKelley (ph) explained
that he was autistic. MAN: And it’s really hard to, as an autistic
person, to get a job where people treat you the same as other people, and not treat you
as this delicate little flower. PAUL SOLMAN: Alexia Petronis (ph) has wrestled
with drug addiction. MARY DALY: May I ask you something? And I hope it’s not too personal. Do you find that the skills and the connection
to the work force help you maintain your sobriety? WOMAN: Yes. It does a lot, because it gives me something
to look forward to. MARY DALY: Do you feel better about yourself? WOMAN: Yes, I do, a lot better. MARY DALY: That’s a great thing, right? WOMAN: Yes, I love it. MARY DALY: I know. It’s a sense of relief. WOMAN: Yes. MARY DALY: You’re not carrying a weight. WOMAN: Yes. MARY DALY: I don’t know if that’s how you
feel, but I have felt that way myself. WOMAN: Yes, it is. Yes. PAUL SOLMAN: Does your nontraditional background
— and I mean dramatically nontraditional — does it give you a different point of view
than other Fed presidents? MARY DALY: I don’t think my experience is
something that I have overcome and now I can get a place at the table. I think of it differently. I think of my experience as something that
influences my thinking and helps me be good at the place at the table. PAUL SOLMAN: At the table setting interest
rates, or at places like Create Common Good and Boise State, seeing how economic policy
affects everyday Americans. From Boise, Idaho, this is economics correspondent
Paul Solman for the “PBS NewsHour.” MARY DALY: I will be on your side. WOMAN: Thank you so much. MARY DALY: Yes.

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