WASHINGTON Nov 27 With the U.S. economy facing
a potential recession and one of the Federal Reserve's stimulus
programs due to expire within weeks, tension gripped the central
"We can't sit back and do nothing," said Erik Larsson, who
was seated at the Fed's mahogany and granite conference table.
He suggested the central bank boost economic growth by pumping
money into the banking system more aggressively.
"I'm not convinced this is consistent with price stability,"
came the retort from Spencer Tirella, also seated at the table.
As Fed policymakers argue how best to help the struggling
economy get back on its feet, the central bank held a
competition on Tuesday where college students vied to make
persuasive arguments on what the Fed should do, hoping to snag
the trophy in the annual "College Fed Challenge."
Some competitors advocated policies that are unconventional
in monetary policy circles, such as fostering stronger economic
growth by allowing a temporary burst in inflation.
Larsson and Tirella's team, hailing from Bentley University
in Waltham, Massachusetts, suggested the policy-setting Federal
Open Market Committee increase the amount of U.S. government
debt it buys to compensate for the expiration next month of
another stimulus program known as Operation Twist.
Fed officials listened to their arguments attentively.
"I promise you I will report this to the FOMC when we meet
in a couple of weeks," said Elizabeth Duke, a governor at the
central bank and one of three judges of the contest.
Members of the winning team, from Northwestern University in
Evanston, Illinois, staged a brief rendition of an FOMC meeting,
or Fed policy meeting, with each student playing the role of a
real-life central banker.
Eric Zhang, who played Richmond Fed President Jeffrey
Lacker, stole the show when he choked with exasperation over
another student's argument that pumping more money into the
economy would not lead to higher inflation any time soon.
"It's just a matter of time," Zhang said, channeling
Lacker's well-known intolerance for inflation.
In the staged meeting, as in every real FOMC gathering this
year, Lacker dissented against what he viewed as an overly lax
Duke assured the students they were judged on the
persuasiveness of their arguments rather than their policy
Beyond showing their smarts before some of the world's most
powerful policymakers, the students also took turns sitting in
Fed Chairman Ben Bernanke's chair and getting their pictures
taken besides framed exemplars of historic greenbacks.
Above the conference table hung a chandelier modeled after
one that hung in Napoleon Bonaparte's Chateau de Malmaison.
Bernanke appeared to sense the impression the regal
boardroom had on the students, many of whom said they planned to
seek jobs at the Fed or on Wall Street, as he welcomed them in
"How do you like my conference room, eh?" Bernanke said.