This week, I was privileged to be present for a lunch meeting with Dr. Richard Wobbekind, the President of the National Association of Business Economists. Rich was also present at the August 2011 Jackson Hole meetings of the Federal Reserve, a private annual meeting of elite Federal Reserve members and economists including Ben Bernanke and the Federal Reserve Board of Governors. For this meeting, Dr. Wobbekind was presenting the economic projections of NABE, which were across the board revised downward from their May 2011 projections. Those that attended the meeting were economists from both the private and public sector, and Mark Snead, VP from the Denver Federal Reserve was also present.

Some of the projections include GDP being revised downward to 1.7% for 2011, and 2.3% for 2012; Full unemployment is expected to be reached by “2015 or later”; NABE believes that the banks are fairly well shored up at this point and doing much better, and their main concern among the group was our high unemployment problem. Dr. Wobbekind mentioned that NABE is fully supportive of the recent stimulus actions of the Federal Reserve (something of concern to me which I’ll address later).

Another interesting observation was the NABE projection for the U.S. Dollar. They have the dollar projected to be flat over the next couple of years. Of course I had to say something. During the question and answer period at the end of the presentation, I asked Dr. Wobbekind- “I’m confused about the NABE dollar projection being flat over the next few years. We’ve seen the monetary base almost triple over the past 3 years, the Federal Reserve is keeping interest rates at 0% until 2013 requiring more liquidity in the market, and the stimulus continues….is it even possible for the dollar to remain flat with such a loose monetary policy?” He answered “This is a NABE projection, (meaning they took a consensus from this group of economists and tried to find common ground) but my personal projections have the dollar declining over the next few years.”

My next question to him went a little like: “I’m sure you’ve seen the IMF report that five central banks (USA, Europe, Japan, Swiss, England) have agreed to provide unlimited liquidity to the European banks in U.S. Dollars for the remainder of 2011 beginning in October. What do you think this is going to do to the U.S. Dollar and to the Euro?” Please keep in mind, this is not common knowledge, it hasn’t been reported in mainstream media in the U.S., and the only reason I know about this is that I frequent foreign newspapers and international banking publications. His response, I’m still trying to figure out. He seemed a bit flustered by the question, and after fumbling a bit, he mentioned that “there must be some agreement between the central banks, the details of which he is not aware of.” He signaled that “Well this is a question for the Federal Reserve”, looking for their presence in the room, not realizing that Mark Snead had just left the room minutes earlier. Somehow he came to the conclusion “to economists, a dollar is a dollar, and it doesn’t necessarily matter what currency it is.” This also concerns me, and I’ll address this later as well.  Finally, he did mention that during the “coffee meetings” at Jackson Hole, there were many discussions about providing more liquidity (more QE) to failing markets.  He failed to go into detail on these conversations though. 

My final question to Dr. Wobbekind was, “We’ve seen in Utah the recent move to allow gold and silver to be legal tender, do you think that this is a viable and good option for Colorado?” The question was met by laughter from the entire room of economists. Dr. Wobbekind concluded by saying that he doesn’t believe that it is a viable option to separate from the US on currency. My question for these economists is, “What’s so funny?” We are sitting in a situation that is unprecedented, especially when it comes to the supply of currency in our markets, yet a serious question about the viability of the dollar long term is met with laughter? These are the same economists that are feeding data to our government entities, and businesses alike. It seems that any time I mention the weakness of the dollar around an economist it is met with a roll of the eyes, laughter, or indifference. Markets are in trouble, stimulus has never worked and continues to fail, currency is created with no backing more liberally than ever before in the history of the world, and you guys continue to plug along creating the same statistics over and over again. Our country needs smart people, wise economists that not only know how to create the statistics, but know how the markets work, and how to analyze the data to determine WHY this is happening. We need proactive economists, not reactive statistic creators.

To the point form Dr. Wobbekind that “a dollar is a dollar, and it doesn’t matter what currency it is.” I have to say, I guess your right in a case where they are printing U.S. Dollars creating an “unlimited” supply, and I don’t own any of them. But in reality, I do own dollars, and like most Americans I own assets that promise me payment in U.S. Dollars. In that case, I really have to disagree. This unlimited printing policy to save European banks is a license to tax the wealth of the American people or anyone that holds U.S. Dollars via a reduction in the purchasing power of these dollars. I ask economists- WAKE UP! There was a “group-think” in the room like I’ve never seen before. I saw no dissent in the meeting, but rather a weak acceptance of the data being provided. We need intelligent discussion, debate, dissention, and balls to return to our business circles, and our government.

Lastly- I’m concerned by the fact that NABE is fully supportive of the recent stimulus actions of the Federal Reserve. Had any of their actions been successful, I’d be singing a different tune, but the actions of the Federal Reserve- all of the TARP, Bail Outs, Stimulus, QE1, QE2, artificial low interest rates, – none of these actions have worked, but yet the Fed continues doing the same things. Has any economist in this country asked themselves, why are they doing the same things expecting a different result? Come on NABE, if there was ever a time for dissention, now’s the time. Why not challenge the actions of the Fed via intelligent analysis of history both recent and distant. I have yet to hear a quality, down and dirty debate in the economic realm of today on the history of monetary policy, or monetary policy in general. I’ve only seen yes men waiting to hear what’s next from these self proclaimed “economic experts/elite.” These “experts” got us into this mess. My challenge to all professional economists is, who’s got the gumption to speak up and get us out of it? That’s all I have for today.

John F. Haettich- 9/22/2011

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Comments
  1. BRAZ says:

    Yea the current economists & Federal reserve big-wigs are the ones that got us into this mess. I vote to kick ’em all out, and bring in younger, fresh & more open-minded people to help deal with this mess. The old folks are still operating on “Vintage” methods of economic procedure and policies. Time to implement something new… maybe the Amero? 😀 (evil laugh)

  2. BRAZ says:

    Lets not forget what Alan Greenspan said “No-one can over-rule the actions that we take” This means the Fed is above the law. How about you take a long walk off a short pier Alan? 😉

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