Wednesday, April 23, 2014

Quantitative Easing….

Chart This !!
Spent several days last week at an economics conference sponsored by the Federal Reserve Bank of Atlanta.  They hold it out in the north Georgia woods - a good distance from reality - which seemed appropriate.

There were a lot of really "scary smart" people at the conference including an economics Nobel laureate, several highly distinguished academics, global bank economists from the U.S., China, Spain, Japan, Chile, Italy, etc. and the leading economic theorists from government agencies such as the Fed, the FDIC, the U.S. Treasury, and the SEC.  You get the picture - the best and the brightest in quantitative economics. No one from NCUA was registered

Never been bothered much about not being "the smartest person at the table"(that's just the way life is); but it's a bit unnerving when you have to honestly admit that you're unquestionably and repeatedly "the dumbest person at the table"(it was that kind of group!).  Practiced being quiet a lot and trying to feign invisibility when the Q&A started soaring well above my head.

The Bernanke Solution !
What I found most intriguing was the open, heated debate among these very bright folks over the merits of the recent practice of "quantitative easing" by the Fed. Literally trillions of dollars have been injected into the banking system in an attempt to revive the U.S. economy.  Former Fed Chair Ben Bernanke colorfully labelled quantitative easing as the practice of "dumping helicopter loads of cash" on to communities all across America.  

Much of the debate centered around the future economic consequences of reabsorbing this excess monetary stimulus as the economy gains strength.  It was somehow both reassuring and refreshing to hear the best and brightest profess profound doubt and concern over being in these uncharted economic waters - with highly arguable and uncertain outcomes. All in decided contrast to the "inerrant robusterians" at the NCUA, who remain resolutely and insanely certain, about the unfailing wisdom of their myopia.

"Nah, just can't see it…"

It would have improved my self-esteem greatly to have had a few of them at my conference table...

But all the robust bashing aside, what was most startling was finding out that the Atlanta Fed had already begun the national monetary unwinding process with at least one way to use all that excess money!

Take a close look at one of the numerous notepads which were spread across all the conference tables…

… can inflation be far behind?


Dennis Moriarity said...

Jim, Take comfort in the fact that most of these uber bright people have a need for less bright individuals practiced in the more "mundane" aspects of life. We have all heard the stories about Albert E. and his inability to do his own taxes. For informational purposes did these bright lights come to any useful conclusions about what could help our jobs challenged, economy or can we continue to expect more pronouncements about how "its getting better its just going to take time".

Jim Blaine said...

Dennis, I'd answer it with the age old axiom: "You could place all economists in the universe end-to-end and you still wouldn't reach a conclusion..."