Their now conventional unconventional monetary policies have been overlaid by communications policies that have fostered a narrative of economic normality and cyclicality. It all seems rather disingenuous given their successful coup de marché, and maybe a bit delusional too given their serious demeanors discussing Philips curve stuff in the face of balance sheet time bombs.
We are hereby delivering a somewhat belated comment on the meeting of monetary central planners and their courtier economists at Jackson Hole. Luckily timing is not really an issue in this context.
Central bank headquarters: the Fed’s Eccles building, the ECB’s hideously expensive new tower in Frankfurt, and the BOJ’s Tokyo HQ (judging from the people in the foreground, it may be a source of noxious fumes).
When discussing papers and speeches delivered at the annual Jackson Hole meeting, it is important to consider the wider socio-economic context. As this article suggests (still the most recent reference available on the topic), the Federal Reserve has essentially bought off the economics profession.
A great many US economists list “monetary policy” in some shape or form as a specialty, or more generally, “macroeconomic policy formation and aspects of public finance”. More than half of the editors of the top seven academic economic journals are on the Fed’s payroll and serve as gatekeepers. The Fed employs hundreds of economists directly, and provides 100ds of millions of dollars in grants to outside economists.
We are quite certain that the situation in other countries is very similar. It is easy to see why practically no fundamental criticism of the monetary system is forthcoming from the economics profession. The basic assumption that money and credit should be centrally planned is rarely challenged (or almost never). Economists naturally won’t bite the hand that feeds them.
Instead, debate as a rule revolves around various “plans”. Their authors are mainly suggesting what they think are improvements on existing plans. Obviously, not all of these plans can be correct; but how can one possibly know which ones might be?
…click on the above link to read the rest of the article…
BoJ governor Haruhiko Kuroda Photo credit: Toru Hanai / Reuters
