Near-Real-Time Federal Reserve Conference Blogging

David Wessel and Greg Ip of the Wall Street Journal are blogging the Federal Reserve Bank of Kansas City's Jackson Hole conference:

David Wessel writes:

David Wessel: From Wausau to Wuhan via Jackson Hole: Much has been made about differences between the easy-to-understand public speaking style of Federal Reserve Chairman Ben S. Bernanke and his famously opaque predecessor Alan Greenspan. But in his speech this morning at the Federal Reserve Bank of Kansas City's Jackson Hole, Wyo., forum, Bernanke seems to be borrowing a Greenspan tactic, one Greenspan often used to avoid talking about interest rates: Pepper your speeches with obscure historical references and unusual metrics.

"When geographers study the earth and its features, distance is one of the basic measures they use to describe the patterns they observe," Bernanke said in the opening of his address on the benefits of globalization and current threats to it, the subject of the conference. "Distance is an elastic concept, however," he continued. "The physical distance along a great circle from Wausau, Wisconsin to Wuhan, China is fixed at 7,020 miles. But to an economist, the distance from Wausau to Wuhan can also be expressed in other metrics, such as the cost of shipping goods between the two cities, the time it takes for a message to travel those 7,020 miles, and the cost of sending and receiving the message. Economically relevant distances between Wausau and Wuhan may also depend on what trade economists refer to as the 'width of the border,' which reflects the extra costs of economic exchange imposed by factors such as tariff and nontariff barriers, as well as costs arising from differences in language, culture, legal traditions, and political systems."

Along the way, Bernanke also quotes Martin Luther, refers to Vasco da Gama and mentions the Napoleonic Wars. He does not, however, cite Greenspan's frequent observation that -- because of the value of ideas and miniaturization of technology -- a dollar's worth of gross domestic product weighs less than it used to.

Greg Ip writes:

Bernanke’s knowledge of economic history was on ample display in his opening remarks Friday to the Fed’s Jackson Hole symposium, “Global Economic Integration: What’s News, What’s Not.” In particular, he draws chuckles by quoting one German observer’s protests that importing from Asia makes Asians rich while impoverishing Germany. The observer? Martin Luther, in 1524. (Bernanke credits his former colleague and co-author, Princeton’s Harold James, for the quote.)

Comments

[Michael Carroll]

I get the point but I don't know why we are chuckling at Martin Luther's statement. Considering what happen to Germany between 1534 and 1648 it's not like there 's any clear repudiation. Remember, on two occasions "Asia" was turned back at the gates of "Germany" and "Germany" subsequently imploded.

[pat]

At least at the time, Germany was exchange real stuff (gold, silver) with real stuff (silk, tea, etc.). Nowadays, how can a country like US become poorer when it exchange its own paper currency with real stuff? US dollar has lost more than 10 percent in the past 3 years, which is basically equivalent to wiping out 10 percent of US cumulative foreign debt -- it's great as long as the Chinese keeps on playing the game.

[anne]

Oh dear, the dollar goes up, the dollar goes down, the dollar stays the same. The dollar is 2.7% lower in value against developed country currencies than it was exactly 10 years ago. Up and down and down and up, but where is the problem? What I find interesting is just how stable the dollar has actually been.

[anne]

Curiously the central bank most concerned about stifling inflation, even though inflation has been no problem, and protecting the value of the currency is New Zealand. The central bank has long had interest rates higher enough to significantly limit growth, and the currency has continually fallen as a result. The relative value of the dollar may well reflect growth prospects over time more than all else.