The Jackson Hole Score: Inflation, 1000. Aggregate Demand, 2. Fed Veep Stanley Fischer Mentions inflation 75 Times In Brief Presentation; Aggregate Demand, Once.

A Benjamin Cole post

When the Federal Open Market Committee was meeting in 2008, and the globe sinking into the worst recession since the Great Depression, there was nearly only one topic on FOMC attendees’ minds: Inflation.

Transcripts released of 2008 FOMC meeting reveal the world “inflation” was mentioned 2,664 times in the year’s eight meetings. It was a monomania.

Nothing Has Changed

But, in reading about the Fed and global central-banker confab in Jackson Hole, it is painfully obvious that little has changed since 2008.

Forget that global trade in H1 2015 is down YOY, and that inflation is dead in the United States, really dead in Europe, and long dead in Japan. Forget that Q2 in Singapore was a deflationary contraction. Forget that nowhere on Earth is there an industry straining to meet demand.

There is only one topic central bankers know, and that is inflation. The topic “football” is less-mentioned at Super Bowl parties.

Fed Vice Chair Stanley Fischer’s presentation was, sadly, typical fare at the Jackson Hole group-think, bias-confirmation fest.

Fischer gave a brief talk at Jackson Hole (well, “brief” by economists’ standards), and the word “inflation” was mentioned 75 times. The word “growth” appeared three times in the Fischer soliloquy. The phrase “aggregate demand” appeared…once.

Lonely Man Kocherlakota

At Jackson Hole, and looking out of place as a pickled onion in an ice-cream banana split, was Minneapolis Fed President Narayana Kocherlakota. The Wall Street Journal said “Narayana Kocherlakota was an isolated voice among officials for sustaining near-zero interest rates.”

Investors—when central bankers determine your fate, think 2008.

Go Long Bonds?

The outlook does not look good for stocks and property, though perhaps risk-free U.S. government bonds will do well enough. Deflation could be on the global horizon, plus recession.

Invest accordingly. If you know how, send me a note.

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