In Jackson Hole, a laid-back retreat with some serious policymaking
(Photo Credit: Andrew Harrer/Bloomberg)
By Neil Irwin
JACKSON, Wyo. -- I'm in Grand Teton National Park for the Federal Reserve Bank of Kansas City's annual economic symposium, one of the most important events for the world's makers of monetary policy.
The conference itself begins this evening, though participants started trickling in last night. It is an odd scene here in the lobby of the Jackson Lake Lodge, which is an awfully good place to be for economic groupies (if such people exist). Right now, Axel Weber and Allan Meltzer are in quiet conversation across the room. Nearby is a guy trying to get his kids organized to go hiking, almost certainly oblivious to the fact that he is standing next to the second-most powerful central banker in Europe and the leading historian of the Federal Reserve.
But this is a conference that serves a serious purpose, beyond giving a bunch of economists (and the reporters who cover them) a chance to breathe some clean mountain air. The academic papers being presented can help advance the state of thinking about monetary policy. And the more private conversations, over meals during the conference and at the Blue Heron Lounge in the evenings, serve an important function of their own, as people hash out views on monetary policy and the economy in a relaxed setting. (It was in a private conference room upstairs, incidentally, that Federal Reserve Chairman Ben Bernanke, Treasury Secretary Tim Geithner and others came up with some of their initial responses to the financial crisis back in August 2007).
This is my fourth time covering the Jackson Hole conference, and each year there has been a topic that, while not necessarily the official issue on the agenda, has dominated discussion in these private settings. In 2007, the question was whether the turmoil that had begun a few weeks earlier in credit markets would have much impact on the broader economy (Um, it did.). In 2008, the question was how the U.S. government would deal with the imminent failure of Fannie Mae and Freddie Mac (It put them under conservatorship, an effective government takeover, two weeks later). In 2009, the question was whether Bernanke would be appointed to a second term as Fed chairman (President Obama made the appointment just a few days later).
In 2010, the question on everyone's mind is: Should the Fed buy hundreds of billions of dollars in securities, ballooning its balance sheet further, in an effort to prop up the faltering economy?
To put it a different way, I was speaking to an economist at breakfast this morning who noted that the official topic of the symposium is "Macroeconomic Challenges: The Decade Ahead." The real question people are pondering, however, is not what monetary policy will look like in the 10 years ahead, he said, but in the 10 weeks ahead.
August 26, 2010; 1:06 PM ET
Categories: Federal Reserve , U.S. Economy
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