Gone Up to the Mountain

Last weekend the Federal Reserve held its summer conference in Jackson Hole, Wyoming. This is part of a grand tradition that goes back centuries. Ever since Moses came down from Sinai with those tablets, leaders have gone up to the mountain to receive wisdom and achieve enlightenment.

You see, economics is the new theology. There are competing sects: the monetarists, the Keynesians, the supply-siders. There are civil debates along with heretics and “flamings.” And we have a central authority charged with implementing received (monetary) doctrine.

Like their religious counterparts, the participants debate and discuss confusing concepts that still have significant real-world implications. “Too-big-to-fail” affects borrowers, depositors, and taxpayers just as much as liturgical reforms affect churchgoers.

The drawbacks are also similar. The Jackson Hole retreat is filled with academics, bank CEOs, and central bankers. There is little to connect the cool mountain air of Jackson Hole with the smoggy city heat of New York or LA. Sometimes the real-world implications of these high-level discussions aren’t appreciated as much as they might be by a manager making sales or a politician running for office.

Like all self-important conferences, you can expect pronouncements of great pomp and circumstance. In fact, the central bankers may break their arms patting themselves on the back. Just don’t expect a lot of enlightenment.

Douglas R. Tengdin, CFA
Chief Investment Officer
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