Talking Rates in the Maine Woods With Economists Over Good Wine
Taking place right before the Jackson Hole Economic Symposium, the gathering is a chance for money managers, traders, and economists to discuss crucial issues without restraint.
Bloomberg Businessweek, August 27, 2019
I have a longish piece in Businessweek about my annual sojourn to Maine.
Truth be told its actually two separate pieces — one on Camp Kotok, the other on Federal Reserve issues, including interest rate policy and questions of Fed independence — then mashed them both together.
Here is the key part about POTUS pressure on the Fed:
“Almost all attendees related similar anecdotes about presidential pressure on the Federal Reserve. Harry Truman famously called the entire Federal Open Market Committee to lunch at the White House, warning, “If you don’t cut rates, you are doing Stalin’s bidding.” Lyndon Johnson invited Fed Chairman William McChesney Martin to his ranch in Texas. LBJ threw Martin against the wall, saying, “Boys are dying in Vietnam, and Bill Martin doesn’t care.” Ronald Reagan’s chief of staff, Jim Baker, invited Fed Chairman Paul Volcker to the president’s library, adjacent to the Oval Office in the White House. With Reagan sitting next to him, Baker told Volcker, “The president is ordering you not to raise interest rates before the election.”
In each of these examples, pressure from the U.S. president was private, personal—and mostly effective. The very concept of a public dispute between a president and his own appointed Fed chair was unthinkable. Not only because it might roil the markets, but simply because adults don’t behave that way.
Alas, those were simpler times, decades before presidential tweeting was a thing. Before public bullying and harassment campaigns, there was direct and personal persuasion. The record suggests it was an effective way for presidents to influence monetary policy. Attendees at Camp Kotok repeatedly noted the current approach was not only unseemly but also had not ever been effective. The president calling out his hand-selected FOMC chair to an audience of 60 million-plus Twitter followers doesn’t seem to be having the desired result.”
The entire piece is filled with some interesting anecdotes and history from participants. You can see that here.
Some photos and videos after the jump
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Bloomberg Businessweek, August 27, 2019
Video
Eagle flies once around surveilling the area
Eagle grabs fish from water
Dining Room
David Kotok, Master of Ceremonies
View from the Dining Room Deck
Nice day on the lake
Not a lot of wine left
L-R: Our guide Jeff Cochrane, Dave Nadig, Jim Bianco
Your Author
Your author after a few days of not shaving . . .
Lobster Roll, Eagle’s Nest Restaurant
View from our cabin
