Janet Yellen, Jackson Hole and the anti-Davos
Once a year, policymakers meet in a trout fishing town to discuss the global economy
A fishing hole in the middle of Wyoming might not be the first place that leaps to mind when one thinks of venues for major world economic conferences, but the bucolic scene of Jackson Hole is just that. Once a year, the global elite descend on the area to listen to what the U.S. central banker has to say.
It all started in 1978, when a dreary conference once known as the Federal Reserve of Kansas City's Economic Symposium was looking to shake things up.
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Organizers of the boring, dry gathering of policy-makers and academics wanted to draw a big name to their conference, and they thought the head of the U.S. central bank at the time, Paul Volcker, was just the name they were looking for.
Volcker was an avid fly fisherman, and so the lure they dangled over him was to move the conference to Jackson Hole — a hotbed for devotees of the sport.
Volcker took the bait like a sockeye to a Parachute Adams, and promised to attend the conference. Once he was on board, other big names committed. And the strange tradition of the Jackson Hole economic conference was born.
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It's now an invitation-only affair. And unlike almost every other conference like this, it's simple and outdoorsy, not rich and flashy. Think of it as a sort of anti-Davos — there's no 13-course meals to be found. Attendees stay in small cabins that don't even have TVs.
And yet, it's become one of the biggest events on the world's economic calendar. Former fed chairs Ben Bernanke and Alan Greenspan used the conference to make major policy shifts. It was here in 2008 that Bernanke and Timothy Geithner, then president of the New York Fed and later Obama's treasury secretary, offered up a brave face on the impending financial crisis — just weeks before, as it turns out, that Lehman Brothers would tip over into bankruptcy.
So, what did Federal Reserve chair Janet Yellen have to say on Friday? Well, not much, really.
While she said the case for raising interest rates "has strengthened in recent months" that was well short of the timeline that many investors have been looking for. And if and when the Fed does decide to get off the sidelines, she said, the move will be "gradual" as the Fed moves slowly into action.
Not exactly groundbreaking stuff. As BMO economist Michael Gregory put it in a note after her remarks were released, "next week's employment report will probably provide more near-term policy clues than Ms. Yellen's musings amid the mountains of Wyoming."
And yet, once again on Friday, the economic world's attention was focused on Grand Teton National Park for a tête-à-tête that stands as a monument to days when it felt like central bankers could wave a wand and shape the world. When these giants of the economy came to the mountains with their crystal balls and charted a course.
Today, we are all well aware of the limits to that power. Perhaps none of them ever had that crystal ball in the first place.
Because eight years after the financial crisis, after nearly a decade of ultra low interest rates, quantitative easing, and all those other strange devices of central bank alchemy, the global economy is looking anything but peaceful.
But the view from the waters of the Snake River in Jackson Hole, meanwhile, is looking as serene as ever.