Usually speeches and papers zip right by the market’s attention. Most economic speeches have a half life of the second or two it takes traders to read the headlines on Bloomberg. And that is already late and stale: the algorithms have already bought and sold several times in the first two hundred microseconds after it hits the wires.
But sometimes it’s worth absorbing things in more depth, to get a feel for the shape of the discussion. The Rethinking Macro Policy conference at the IMF Spring Meetings two weeks ago is one of those things.
If you are looking for conspiracies about the world economy – and plenty do – a high level discussion session at the Spring Meetings is one of the most likely places to find them. In the past the meetings have had to be ringed by police to prevent Occupy and their predecessors breaking in. Major riots sometimes happen at the Annual Meetings.
So what goes on behind these closed doors? See for yourself, on open video feed. The truth is most policy discussion is relatively open now, except in the case of short-run announcements or the need to protect specific sources.
You can be a fly on the wall, with the advantage that you can stop the video whenever you want (and I’ve sat through many very long economic conferences over the years). You can skip the downright tedious parts.
The upshot is a new humility. IMF Chief Economist Oliver Blanchard wrote an introductory paper with his colleagues , which is striking for its pessimism about obvious right answers. Even five years on from the crisis, they say, “the contours of a new macroeconomic policy consensus remain unclear.” There is no real chart: policymakers are “navigating by sight.”
George Akerlof (a Nobel winner) explains the state of the world economy like this in one session: the financial crisis is like a cat up a tree. Everyone has a different view of how we’ll get it down. “My view is the cat is going to fall, and I don’t know what to do about it,” he says. But at least policy reaction to the crisis has at least been better than predicting it in the first place, as we haven’t got ourselves into another great depression.
But is all the secret stuff conducted in the margins and corridors? There’s little that stays secret for long these days. For example, the Federal Reserve publishes its meeting minutes two weeks later and the full word-for-word transcripts after five years.
Of course, senior policymakers will frequently be guarded in press interviews, for fear of being at the wrong end of a “story”. But you will generally find they express clearly what they think in speeches, papers and other material.
The trick is to be able to understand the world from their point of view, as well as your point of view. That’s much more difficult than looking at words in isolation. The deep secrets of economic policy hide in plain sight, because people as a rule don’t take the time to notice them.