Fly fishing

The Fishing Lure, a Federal Reserve Chair, and Jackson Hole

Each August, the center of the financial world moves to Jackson Hole, Wyoming, for the annual Federal Reserve Symposium on the Jackson Hole Economy. It runs August 25-27 and is hosted by Kansas City Regional Federal Bank. But how did this conference, so far from Washington and Wall Street, become so important?

It started in 1982. The Kansas City Fed was planning its annual conference. He had already held a few small economic confabs on agriculture. These were exciting discussions if you were an agricultural economist, but kind of a yawn for the rest of us. In 1982, the organizers wanted to think big and talk about something other than agriculture. But they needed a brand name. Who better than the chairman of the Federal Reserve at the time – Paul Volcker? But how to attract it? Promise him to fish. Fly fishing.

One of the best fly fishing spots in the Kansas City Fed area was Jackson Hole. Former Kansas City Fed President Tom Hoenig said Volcker took the bait. He was there, waders and all.

“On the first night of the opening dinner, he and another person who was fishing with him came to dinner a little late and they were late enough that they couldn’t change clothes, so they were still in their fishing gear. “, recalls Hoenig. .

Hoenig says it actually charmed the academics and Fed officials who were there. But when they got to work, some economists attacked Volcker, blaming him for driving interest rates up to double digits. Yet Volcker returned for later conferences, creating a tradition that later Fed chairs mostly still follow. If they don’t like to fish, there’s always the Friday night barbecue, where the economists wear cowboy hats. Hoenig says that one year they held a stringing contest.

“People have learned that it’s harder to rope yourself up than you think,” he recalls.

During the day, academic papers are debated. Former Fed Vice Chairman Alan Blinder, who believes he has attended more than 30 Jackson Hole symposia, says the goal is an unscripted, informal exchange of ideas.

“They are in a relaxed atmosphere, the president is giving a speech,” he explained. “Others are there, maybe asking questions, mingling with academics, mingling with central bankers from other countries.”

Economic historian Gary Richardson of UC Irvine says Jackson Hole can also be a window to the future. The 2005 conference focused on the legacy of outgoing Fed Chairman Alan Greenspan, with an early warning that years of low interest rates were creating a housing bubble.

“Because 2005 is very close to the peak of the boom and people are saying – well, there might be this dark cloud looming over the horizon,” Richardson said.

In 2007, Jackson Hole organizers decided the topic would be housing. Some economists complained that it would be boring, until it became clear that the housing bubble was about to burst.

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