Federal Reserve interest rate decision meeting

Every summer, the Fed should be in the U.S. Midwest resort Jackson hole seminar held in global central bank policy. August 28 of this seminar has just ended, there has been trainer of the "shadow."

Kansas City Federal Reserve President Thomas Hoenig in particular put on a cowboy hat to trainer's appearance at the meeting leader to the global central banks to Return Weapon.

Hoenig seems to imply that the policy authorities and the relationship between financial institutions: incentives and penalties trainer and gradually domesticated animals, usually good trainer can make animals were under the control of the whip to become docile. The unexpected ruling theory of creativity, but not without reason.

To make beast obediently yield, trainer first thing to do is, do not scared them; then, these beasts are know who the real "boss"; Finally, pay attention to body language and speech tone are much more tame than the gross popular. In this way, then ferocious beast, would become consistent with the master mind.

Studies of this ruling, if extended to the level of economic power, also is a good reference. Those who control the economic power of decision-makers can learn about trainer's philosophy.

This "hole in Jackson would" completely different atmosphere to last year. This time last year, the leaders of the participating central banks have generally felt that the economy out of the woods, gradually recovering; last year, the focus of discussion has focused on how the economy plays a major role in stimulation of the central bank and orderly exit. However, this year, exit mechanism has disappeared from sight, replaced by a possible mechanism for the re-introduction of the approach.

Europe, the United States and Japan, and other important economies, have released weak economic data, the economy slowed even further into crisis.

Hoenig in solemn session, the spirit of fun to play ultimate. Performance in the trainer, he first used harsh tone: "You have to figure out these financial institutions, capital requirements will be up next." And then cast aside to comfort these be regarded as a "beast" of financial institutions "But do not be afraid, we will help you replenishment." Finally he sent out relentless words, "But we have to ban some of the high risk of proprietary trading! If you have the security of these banks can not control me, that I had brought you the" big unloading 8 "."

Hoenig's ruling and the trainer does exactly the same study: the face of "too big to fail" financial giants who have the leadership philosophy and narrative; not simply demanding them, of course, can not leave alone, Only timely pressure monitoring to achieve the best results.

The ultimate goal of financial trainer should be very clear: control the banks and strengthening capital regulation, control the quality of financial products, while fixed on hedge funds and rating agencies. However, in the current governance system and financial environment, when to give the financial system with the right amount of "confining circle," the Fed and other decision-making bodies has become an important issue.

Hoenig in this year's meeting of Federal Reserve interest rate decision, and each time voted against the Federal Reserve should not be blindly committed to advocating "some time" to keep rates close to zero. However, he would like to learn to play the intention of the ruling trainer apparently failed. It is said that looking at the date of Hoenig's performance has been well known for strict supervision of the Federal Reserve Chairman Ben Bernanke remained silent, and not a rare welcome speech at the opening dinner.

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