The Federal Reserve has what the New York Times called its “biggest shindig” of the year at Jackson Hole, Wyoming next week. Curiously, the once sleepy, small, mountain town area is now a playground for billionaires and (for our purposes) hosts the most important monetary policy conference in the world for central bankers.
Originally, Jackson Hole was named after famed early 19th century fur trapper, Davey Jackson. Hole refers to a high mountain valley. The valley was renamed Jackson Hole somewhere along the way. The main community and county seat of Teton County is named Jackson.
With US stocks blown up bubble tight, two red flags in the labor market, real estate markets coming unglued, and consumer confidence near all-time lows, is it any wonder that non-invitees are curious about the affair and what might transpire in its aftermath?
Many, including the US’s Federal Reserve Chairman Jay Powell might prefer to get stuck in the beautiful and serene Jackson Hole area with their fellow inflation monsters by a freak summer storm, rather than return to their lavish offices in Washington, DC. After all, they might prefer hanging out longer with their like kind. The world’s leading money-printers don’t often have the opportunity for off-the-record private chats with each other and have such a prominent podium to talk about their own accomplishments and to express their typical false confidence in the future, all the while planning and sometimes coordinating their next moves.
Things have been particularly difficult for central bankers in recent decades. Prior to 1970, while we were on the Bretton Woods Gold Standard, no one really paid much attention to central bankers with their hand wrapped in gold. Once the golden rule was broken, central bankers earned the public’s scorn for all the price inflation and economic instability they created.
They only recovered with Paul Vocker’s monetary austerity measures in the early 1980s and a fiscal sobriety pledge from politicians around the world. They retreated into a public policy of “transparency” which is at odds with their basic nature of secrecy and unflappable public “confidence.” The 2 percent inflation-targeting policy also gave them a puzzling sense of measured respect. With politicians breaking their pledges the world over and spending like drunken third-world dictators, central bankers find themselves backed into a deep stagflation corner where their best hope may be a global economic crisis that makes their one and only mission clear—print more money, full speed ahead!
Oddly, the Jackson Hole symposium takes on its modern form due to Chairman Paul Volker’s favorite hobby—flyfishing!
The original Kansas City Fed symposium was held in—well, Kansas City. The original topics centered on agricultural issues important in that Fed district’s economy. Later they would move the conference to places like Vale, Colorado. In 1982, they moved the conference to Jackson Hole in order to lure Volker to be the keynote for the conference with the location being his favorite fishing hole.
The change in venue also marks a change of theme and focus. Instead of focusing on the economy of its district, the Kansas City Fed conference would henceforth be concerned with major global issues related to monetary policy. Originally the conference consisted of local economists and Fed officials, along with a few experts on specialized topics of local interest, but it is now dominated by central bankers, ivy league elites, and globalist issues. One suspects that the local business press originally covered the event now reserved for the world’s elite business media.
I would love to attend this event, but I did not receive an invitation. It is invitation only. Of course, even if I had, I am sure I would not be privy to the most important side conversations. And odd conversations they would be!
Modern central bankers do not believe their own money printing causes price inflation, wealth redistribution, economic bubbles, or business cycles as economic theory clearly suggests. According to central bankers, they do not cause economic problems, they only solve them.
This year’s conference takes place August 21-23 where the speeches will address the topic of “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.” No doubt there are a number of important issues worth examining here.
However, with all the news about President Trump wanting to fire Chairman Jay Powell and appoint rabid inflationists and dollar devaluationists to the Fed Board, the depreciating dollar, exploding debt, and the wayward direction of interest rates, everyone now fully understands that the main importance of this conference is not the public topic of the research papers, but the private topics of conversation among the elite central bankers.
I should also mention the other famous Jackson from the 1820s and 1830s—President Andy Jackson. He shut down the American central bank of the 19th century and ushered in a multi-decade period of unprecedented prosperity. That is a topic that central bankers dare not mention but which must increasingly weigh on their minds and souls.
