Richard W. Fisher, the new president of the Dallas Federal Reserve Bank, may have the ultimate small-world story. In early October he was in Waco speaking to a business group. He casually mentioned that we imported nearly 54 million golf balls from China while we exported the DuPont Surlyn polymer that is used to cover some balls.

A polite man, he resisted the opportunity to ask where the Chinese would have us when they accounted for 100 percent of our golf ball imports.

Less than two hours later he received a message on his Blackberry. It was an offer, from China, for Surlyn-covered golf balls with performance characteristics identical to the Suryln-covered balls made by Titleist in this country.

They were available in any quantity for $4 a dozen, a fraction of the $28 MSRP for the domestic product.

It's a small world. It's also a flat world.

Visiting him in his office a few weeks ago and reading his speeches on the web (available at, I got the sense of a man circling something he can't fully describe. He points at it. He gestures.

But what he is looking at is the cloudy, unfinished map of Flatland, the new world portrayed in Thomas L. Friedman's "The World Is Flat" (Farrar, Straus, and Giroux, $27.50). The difference is that Friedman tells a story of what he observes. Mr. Fisher has to do more than tell a story.

He has to make decisions.

As a member of the Federal Open Market Committee, the group of eight that has been raising interest rates at a "measured" pace for more than a year, his decisions may influence the future course of the U.S. economy and, indirectly, the world economy.

He needs a map. Unfortunately, the map is still being drawn. Nor has the operating manual been written. No one really knows how this big flat world is going to work.

But his speeches, including the one he made in Waco, reveal some broad themes. Think of them as major landmarks on the emerging map.

--------- The United States is still the elephant in the room. While media stories about China and India make us sound like the proverbial 98 pound weakling, our $12 trillion gross domestic product --- what we produce in materials, goods, and services---far surpasses any other nation. Mr. Fisher observes that the state of California alone produces more than China and that Texas alone produces 21 percent more than India.

With the U.S. having more infrastructure and more productive capacity than most nations in the world, Mr. Fisher, the former trade negotiator, looks around the world and says, "What can we sell them?"

He's serious. Flat world is a very tough, competitive place. But we have a lot to sell.

--------- Taxes will flatten, too.   A flattened, interdependent world of expanding trade means competition on every level. That includes taxes. Just as states compete for corporations and new factories, so do nations. Mobile capital will go to where it is treated best.

That means pressure on taxes in all forms, regardless of which party is in power. It isn't an accident, Mr. Fisher points out, that Estonia now has a flat tax.

So whatever happens with the recently released recommendations of the president's tax panel, we can expect constant pressure to flatten tax rates in the future.

--------- The quality of our money is vital.   With virtually all money in the world backed only by its usefulness as a medium of exchange, how nations manage their finances will be more than important. It will be the whole ball game. There will be less tolerance for inflation.

Since the dollar is the world's reserve currency, the United States has a heightened responsibility to keep inflation under control. That means reducing federal deficits.

Here, Mr. Fisher sees the location of the Federal Reserve clearly. It earns its place on the map by keeping a lid on inflation. Inflation would undermine our currency and a weak currency will undermine the growth of trade.

One consequence: Washington shouldn't expect the Federal Reserve to make life easy for them by monetizing federal debt.

Mr. Fisher has repeated this last observation enough times, in enough places, that we have to believe he means it. We also have to believe he wouldn't say it if other members of the Federal Open Market Committee weren't reading the same map.

Tuesday: Flattening Taxes

On the Web:

Speeches by Richard W. Fisher