This week on Masters in Business I sit down with an old fishing buddy — Martin Barnes, Chief Economists of BCA Research.From 1973 to 1977 he was an economist with British Petroleum in London; Mr. Barnes spent 10 years as chief international economist with Wood Mackenzie, one of the top U.K. brokerage firms. He has been with Montreal based BCA for 30 years (he lives on Victoria BC, an island near Vancouver).
We discuss their global institutional client base of sovereign wealth fund, hedge funds, state pension funds and central banks. He tells us about the inflation”in things we buy everyday and the deflation in the things we buy only occasionally.”
Barnes has been a student of and a confidante to central banks around the world. He has been visiting the Federal Reserve and its staff since 1979. He has a long history of speaking with Fed governors, researchers, and chairmen. While he defends what the Fed did in the midst of the crisis, he has been a critic of the excessive accommodation we have seen following the first one (maybe even the second) QE. He also discusses how poor the Fed’s forecasting track record is, and how it levels the playing field for all economic analysts (though admits its scary realizing that they know no more than anyone else about the future).
Forecasts aside, we discuss the Fed’s views of here and now, and why the Fed’s model, indeed, ALL econometric models based upon the past, lead us astray.
The Fed’s changes in transparency may has swung too far, the dot plots are wrong, they talk too much, and in their efforts to communicate, they have gone too far.Barnes says “the Fed should act more and talk less.” We also discuss the subject of debt and financial repression.
You can hear the full interview, including our podcast extras, at iTunes, Soundcloud and Bloomberg. All of our earlier podcasts can be found at iTunes, Soundcloud and Bloomberg. (Please send your suggestions for future topics to MIBPodcast at Bloomberg dot net).
All of the recommended books discussed can be found after the jump.
Next week, we speak with Arun Sundararajan, professor at NYU’s Stern School of Business, and author of The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism.
Martin Barne’s recommended books