Labor in a (Jackson) Hole

The Federal Reserve of Kansas City puts on the big event every year – and why not throw a big party when your territory includes Jackson Hole, Wyoming? This year’s production concluded after presentations and official pronouncements from all the top central bankers of the world – Mario Drahgi of the European Central Bank (ECB), Haruhiko Kuroda of the Bank of Japan (BOJ), and our own Janet Yellen. It’s a must-see event if you want a front row seat for the big show of policy changes among the most powerful people in the world.

This year, the theme was “Re-Evaluating Labor Market Dynamics”, and the power players from around the world made it clear that nothing is going to change in the near future. If that sounds like the biggest let-down for a big show ever, you’re right. The Fed never intended for this to be a huge theatrical spectacular. It’s a place for central bankers to get together and agree on things. And what they agreed on, more than anything, is that in the developed world there is nothing more important than figuring out just how much “slack” there is in labor markets and how to take it up.

But it’s more exciting than it seems if you want to predict what will happen in the next year.

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The Real Power

Between the political conventions, the people running for the second most powerful office in the land have to stand down for a moment and let the Big Guy speak.  That would be Ben Bernanke, who delivered his annual address at the Jackson Hole conference today.  You want real power?  If being able to print $1.6T ain’t it, I don’t know what is.

The speech was highly anticipated because in the past the occasion was used to announce rounds of Quantitative Easing.  There was hope there would be a third round of it, which is to say more greenbacks flowing out into the economy hot off the Fed presses.  It didn’t happen.  Bernanke spoke instead about what’s gone wrong and what they’ve done to try to get things to start back up.

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