Home » Posts tagged 'jackson hole'

Tag Archives: jackson hole

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

See No Evil, Speak No Evil…

September 8, 2017

SEE NO EVIL, SPEAK NO EVIL… 

The Jackson Hole speeches of Janet Yellen and Mario Draghi last week were notable for the omission of any comment about the burning issues of the day:

…where do the Fed and the ECB respectively think America and the Eurozone are in the central bank induced credit cycle, and therefore, what are the Fed and the ECB going to do with interest rates? And why is it still appropriate for the ECB to be injecting raw money into the Eurozone banks to the tune of $60bn per month, if the great financial crisis is over?i

Instead, they stuck firmly to their topics, the Jackson Hole theme for 2017 being Fostering a dynamic global economy. Both central bankers told us how good they have been at controlling events since the last financial crisis. Ms Yellen majored on regulation, bolstering her earlier-expressed belief that financial crises are now unlikely to happen again, because American banks are properly regulated and capitalised.

Incidentally, more regulation hampers economic dynamism, contra to the subject under discussion, and confirms Ms Yellen has little understanding of free markets. Mario Draghi, however, told us of the benefits of financial regulation and globalisation, and how that fostered a dynamic global economy. But a cynic reading between the lines would argue that Mr Draghi’s speech confirms the ECB is in thrall to Brussels and big business, and is merely representing their interests. And he couldn’t resist the temptation to have a poke at President Trump by expressing the benefits of free trade.

Hold on a moment, free trade? Does Mr Draghi really understand the benefits of free trade?

That’s what he said, but his speech was all about the importance of regulating everything Eurozone citizens can or cannot do. It is permitted free trade in a state-regulated environment. It is a version of free trade according to the EU rule book, agreed with big European business, which advises Brussels, which then sets the regulations. It is a latter-day Comintern that allows you to trade freely only on terms set by the state for prescribed goods with other states of a similar disposition. Draghi’s speech was essentially justifying the status quo laced with Keynesian-based central bank dogma.

Central Bankers’ Shifting Goalposts

September 6, 2017

Central Bankers’ Shifting Goalposts

BRUSSELS – The theme of this year’s meeting of the world’s central bankers in Jackson Hole, Wyoming, had little to do with monetary policy. “Fostering a Dynamic Global Economy” is, of course, an important topic. But it is telling that the European Central Bank chose, for its own annual gathering, a similar “non-monetary” topic (“Investment and Growth in Advanced Countries”).

There is nothing wrong with central bankers considering challenges in areas like growth, trade, and investment. But central banks were made independent precisely because it was understood that they would be held accountable for achieving their own objective of maintaining price stability, regardless of the economy’s underlying growth rate. So why is it that central bankers would rather look at external issues than focus on their own area of responsibility?

The answer, it seems, is that they cannot quite explain their current approach.

Conditions today are very favorable for monetary policymaking, particularly for the ECB – as a brief look at history makes clear. Since the creation of the Economic and Monetary Union (EMU) in January 1999, the ECB has been solely responsible for determining the EMU’s monetary policy. (Although national currencies remained in circulation until 2002, exchange rates were “irrevocably” fixed from 1999.)

The ECB’s job was hard from the beginning. After all, when the euro was born, global financial markets were in turmoil, owing to the Asian crisis of 1997 and the Russian default of 1998. The VIX index, which measures stock-market volatility, had hit 44% in August 1998, and during the euro’s first few years, it hovered around 25-30%, compared to around 12% today. While unemployment in the eurozone was declining, the rate was close to 10%, and it remained higher than today’s level, 9.3%, for all of 1999.

…click on the above link to read the rest of the article…

Jackson Hole and the Appalachians

August 27, 2017

Jackson Hole and the Appalachians


Henri Cartier-Bresson Trafalgar Square on the Day of the Coronation of George VI 1937
 

The Jackson Hole gathering of central bankers and other economics big shots is on again. They all still like themselves very much. Apart from a pesky inflation problem that none of them can get a grip on, they publicly maintain that they’re doing great, and they’re saving the planet (doing God’s work is already taken).

But the inflation problem lies in the fact that they don’t know what inflation is, and they’re just as knowledgeable when it comes to all other issues. They get sent tons of numbers and stats, and then compare these to their economic models. They don’t understand economics, and they’re not interested in trying to understand it. All they want is for the numbers to fit the models, and if they don’t, get different numbers.

Meanwhile they continue to make the most outrageous claims. Bank of England Governor Mark Carney said in early July that “We have fixed the issues that caused the last crisis.” What do you say to that? Do you take him on a tour of Britain? Or do you just let him rot?

Fed head Janet Yellen a few days earlier had proclaimed that “[US] Banks are ‘very much stronger’, and another financial crisis is not likely ‘in our lifetime’. “ While we wish her a long and healthy life for many years to come, we must realize that we have to pick one: it has to be either a long life, or no crisis in her lifetime.

…click on the above link to read the rest of the article…

How Capitalist Central Banks Have Been Creating the Next Financial Crisis

August 11, 2017

How Capitalist Central Banks Have Been Creating the Next Financial Crisis

As central bankers, finance ministers, and government policy makers head off to their annual gathering at Jackson Hole, Wyoming, this August, 24-26, 2017, the key topic is whether the leading central banks in North America and Europe will continue to raise interest rates this year; another topic high on the agenda is when the three major central banks – the Federal Reserve, European Central Bank and Bank of England – might begin to sell off their combined $9.8 trillion dollar balance sheets that they accumulated since the 2008-09 banking crisis.

But the more fundamental question – little discussed by central bankers and academics alike – is what are the likely effects of further immediate rate hikes and/or commencement of central banks’ balance sheet reductions? The assumption is further rate hikes and sell-offs will have little negative impact on the real economy or financial markets. But will they? The effects of hikes and sell off will prove the opposite of what they predict.

Central banks in the US and Europe were grossly in error predicting in 2008 that massive liquidity injections and zero interest rates would re-stimulate their economies and return them to pre-crisis real GDP growth rates. They are now about to repeat a similar error, as they presume that raising those rates, and retracting excess liquidity by selling off balance sheets, will not have a significant negative impact on the real economy or financial markets.

Central banks’ balance sheets have been growing for almost nine years, driven by programs of zero-bound (ZIRP) interest rates and the introduction of firehose liquidity injections enabled by quantitative easing, QE, bond and other securities purchases.

…click on the above link to read the rest of the article…

Gold Sector Correction – What Happens Next?

September 2, 2016

Gold Sector Correction – What Happens Next?

The Long Awaited Correction is Underway

The gathering of central planners at Jackson Hole was widely expected to bring some clarity regarding the Fed’s policy intentions. This is of course a ridiculous assumption, since these people have not the foggiest idea what they are doing or what they are going to do next. Like all central planners, they are forever groping in the dark.

U.S. Federal Reserve Chair Janet Yellen (L) congratulates Stanley Fischer as he is sworn in a vice chairman at the U.S. central bank in WashingtonHi there! Stanley Fischer finds chief central planner Janet Yellen deep in the bowels of the Eccles building. In Jackson Hole, they played “good cop, bad cop”.

Nevertheless, financial markets keep reacting to their words as if they actually meant something – and of course we have to deal with that reaction, regardless of how irrational it is.

As we have mentioned many times during the gold bear market from 2011 to 2015, it was primarily the threat of a rate hike that put pressure on gold and supported the US dollar. We argued that once the Fed finally dared to implement a baby step rate hike, gold would very likely rally in a “buy the news” type response – which indeed happened.

Ms. Yellen’s speech at Jackson Hole (we will post a little post mortem on that gathering of interventionists soon) was still deemed non-committal enough by the markets. Her deputy Stanley Fischer attended the event as well though, and he started mumbling something about rate hikes.

Pure fantasy this may well turn out to be, but rate hike odds as reflected in the Federal Funds futures market shifted anyway. The gold market in turn still seems to care a lot about these shifts, in spite of the fact that trading in the underlying federal funds market is essentially dead as a doornail (with trillions in excess reserves, banks have no need for interbank borrowing). The threat of a rate hike was deemed to have returned.

…click on the above link to read the rest of the article…

Jackson Hole: Cherry Flavored Cyanide, or Strawberry

September 9, 2015

Jackson Hole: Cherry Flavored Cyanide, or Strawberry

The Federal Reserve puts on a conference in the idyllic location of Jackson Hole, Wyoming. Of course it’s all about how best to centrally plan our little lives for us, and who is to be sacrificed to whom.

The American Principles Project and the Atlas Network Sound Money Project, provided a much needed alternative in the Jackson Hole Summit. By choosing the same time and place as the Fed, Steve Lonegan capitalized on the publicity. In fact, the #jacksonholesummit hashtag was trending on Twitter the first day of the conference, so it was a big success.

There were many great talks. Larry White observed that the government used to weaken the banks with restrictions, but now does it with privileges (think about that for a moment). MP Kwasi Kwarteng talked about fiscal discipline as a prerequisite for the gold standard. Judy Shelton asked the question that should be on top of everyone’s mind: what if central banks are wrong?

Forget the blah blah of the Fed, this is what the world needs to hear. From the turnout and energy, I believe next year will be even bigger and better.

One idea always comes up in a discussion of sound money. The Fed manages the dollar based on (in theory) unemployment and consumer prices (CPI). Instead, couldn’t it just use the gold price?

In my talk, I explained why not.

A few months ago, the Supreme Court struck down an unjust New Deal era raisin planning board. This committee takes grapes from farmers, to drive up the price. If it later sells the grapes, the farmers may get paid. It’s looting, plain and simple, and the Court rightly tossed it into the dustbin of history.

– See more at: http://www.cobdencentre.org/2015/09/jackson-hole-cherry-flavored-cyanide-or-strawberry/#sthash.0YnAIgIg.dpuf

 

Jackson Hole – Meeting of the Physics Envy Brigade

August 27, 2015

Jackson Hole – Meeting of the Physics Envy Brigade

Planners Meet to Discuss the Impossible

The Jackson Hole pow-wow takes place this weekend. A more revolting get-together of actual and armchair central planners (i.e., the advisors to the planners, many of whom see themselves as planners-in-waiting) could hardly be imagined. One has to wonder how much more damage they will be allowed to inflict before someone finally says “enough!”. The parlous state of the global economy and the series of booms and busts we have experienced over the past 20 to 30 years are almost exclusively their doing (some of the responsibility has to be shared by politicians and other bureaucrats, who have hopelessly over-regulated and overtaxed economies, especially in the developed world).

fischer1Fed vice chairman Stanley Fischer, one of the keynote speakers at the Jackson Hole conference – more on him further below
Photo credit: Simon Dawson/Bloomberg

In their conceit these supposed “wise men” (we prefer the more fitting term “high IQ morons”, h/t Bill Bonner) seem to believe that bureaucrats can actually plan the economy and will deliver an outcome that is superior to that the free market would provide. In spite of all the evidence to the contrary that has amassed over what are by now centuries, they actually appear to be buying their own BS, which makes them especially dangerous.

As Ludwig von Mises has shown in 1920 already (in his seminal monograph Economic Calculation in the Socialist Commonwealth), central planning of the economy is literally impossible. Mises focused on the lack of a price system once the material factors of production are under government control and no longer freely tradable. Without proper prices, it is impossible to engage in rational economic calculation and hence it is no longer possible to properly allocate scarce resources.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress