Well Pardner, let me give you a big wonderful Wyoming welcome to Uncle Ben’s annual Economic Symposium(aka the K.C. Federal Reserve Dog and Pony Show).
I haven’t been able to get a comprehensive guest list and of course no bloggers were invited. I assume my old Richmond buddy Kartik Athreya made sure of that:http://cal48koho.blogspot.com/2010/08/kartik-athreya.html.
The invitees were central bankers, university economists and other current and ex Fed folks and of course a large assortment of clueless neoclassical economic clowns who should have arrived dressed as the wizzards and sorcerers they in fact are. Ben in his keynote speech said”preconditions for growth in 2011 are in place.” Like what for example Mr Bernanke? You mean 18% unemployment, 130% of GDP Federal debt to GDP if you include the GSE’s Fred’sFannie,trade deficits heading to $700 Billion, collapsing housing markets, unfunded pension plans and soaring state budget deficits! Delphic obfuscator that he is, who knows what he is talking about. The obvious fact is no one really knows what to do about how to restore “growth.” The possibility that growth as we have known it may be at an end has not yet occurred to them. Word has leaked out that there is dissension at Fedsville meetings as consensus seems to have collapsed. Even in the business and economic media the stimulusians slug it out with the austerians. Rabid stimulusians like Paul Krugman say the solution is more stimulus but not these trivial shovel ready sub-trillion dollar pittances. Paul wants the big bucks and he along with a lot of other great minds from Donald Regan to Dick Cheney have told us the deficits don’t matter! But so far no one is paying much attention to Paul except NPR and PBS. In fact , one of the few speakers casting dissent out at Jackson Lake Lodge in his speech was European Central Bank President Jean-Claude Trichet who urged governments to cut their debt not expand it and a failure to do so would result in another “lost decade.” Carmen Reinhart and her hubby Vincent did deliver a speech which might have been worth hearing. Carmen as you might know was co author of an important book “this Time is Different”http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165/ref=sr_1_1?ie=UTF8&s=books&qid=1283036244&sr=8-1 which analysed financial collapses over the past few centuries. Neoclassical clowns never look through the retrospectascope of history or even consider the possibility that it might be different this time. I doubt if Ben read has it. If he had, he would be having second thoughts about more stimulus like QE(money printing), peddling and trading mortgage securities for Treasuries, changing reserve requirements, fiddling with interest rates and so forth. Ben needs to look over the edge . If he did he would see that he is looking into a veritable Black Hole which has sucked into its maw all his bright ideas and trillions dumped into Wall street banks and all the other bullets from his six shooter. Ben says he has more bright ideas like buying long dated treasuries now that our old pals like China and Japan aren’t.How that will restore growth to a country and a banking system that is bankrupt is beyond me. The American people are way ahead of the Federal and State governments. They piled up huge debts and are now not borrowing and not spending. They are paying down debt and saving. The national savings rate is up to 6% from negative percent a few years ago.Outstanding credit card debt is dropping. They are doing the only sensible thing. It may not be austerity but it is the next best thing. The American family has the massive advantage of far less complexity and not having economists advising them what to do. This is precisely what Mr Trichet told the Symposium but who knows if Ben and the Feddies were listening. If you always do what you’ve always done, if you always think how you’ve always thought, then you’ll always get what you’ve always gotten. We are in a depression now and talking bobble heads never tire of asking : Is this a recession or a double dip recession? I say paraphrasing Gertrude Stein: this ain’t no recession, there ain’t gonna be a recession, there never has been a recession, that’s your answer.