How A Handful Of Unsupervised MIT Economists Run The World

Tyler Durden's picture

Ever get the feeling that the entire global economy is one big experiment conducted by several former Keynesian economists from MIT with a bent for central planning, who sit down in conspiratorial dark rooms in tiny Swiss cities and bet it all on green until they double down so much nobody even pays attention to the game? No? You should. Jon Hilsenrath, of all people, explains why.

From the WSJ:

Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.

 

The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world's biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world's economic output.

 

Of late, these secret talks have focused on global economic troubles and the aggressive measures by central banks to manage their national economies. Since 2007, central banks have flooded the world financial system with more than $11 trillion. Faced with weak recoveries and Europe's churning economic problems, the effort has accelerated. The biggest central banks plan to pump billions more into government bonds, mortgages and business loans.

 

Their monetary strategy isn't found in standard textbooks. The central bankers are, in effect, conducting a high-stakes experiment, drawing in part on academic work by some of the men who studied and taught at the Massachusetts Institute of Technology in the 1970s and 1980s.

 

"Will history decide they did too little or too much? We don't know because it is still a work in progress," said Kenneth Rogoff, an economics professor at Harvard and co-author of a book, "This Time Is Different," examining financial crises over eight centuries. "They are taking risks because it is an experimental strategy."

 

Three of the world's most powerful central bankers launched their careers in a building known as "E52," home to the MIT economics department. Fed Chairman Ben Bernanke and ECB President Mario Draghi earned their Ph.D.s there in the late 1970s. Bank of England Governor Mervyn King taught briefly there in the 1980s, sharing an office with Mr. Bernanke.

 

Many economists emerged from MIT with a belief that government could help to smooth out economic downturns. Central banks play a particularly important role in this view, not only by setting interest rates but also by influencing public expectations through carefully worded statements.

 

While at MIT, the central bankers dreamed up mathematical models and discussed their ideas in seminar rooms and at cheap food joints in a rundown Boston-area neighborhood on the Charles River.

 

Over Sunday dinners in Basel, which often stretch to three hours, they now talk of pressing, real-world problems with authority. The meals are part of two-day meetings held six times a year at the BIS. Dinner guests include leaders of the Fed, ECB, Bank of England and Bank of Japan, as well as central bankers from India, China, Mexico, Brazil and a few other countries.

The same BIS, incidentally, which is an employer of "The People Bringing You Currency Manipulation On A Daily Basis" whom we described in April.

The role of the Bank for International Settlements has broadened since it was formed in 1930 to handle reparation payments imposed on Germany after World War I. In the 1970s, it became the center of discussions on bank capital rules. In the 1990s, it became the meeting place for central bankers to talk about the global economy.

It is also the place where the coordination of all the real trading these days: that conducted by central planners of course. Most importantly, it is responsible for perpetuating the status quo.

As for our unsung MIT heroes...

The 18-member group, formally known as the Economic Consultative Committee, has only once issued a public statement: a two-line missive in September, promising to look for solutions in interbank lending markets, responding to allegations that some private banks had conspired to manipulate the Libor interest rate.

 

On Mondays after the dinner, the bankers join a larger group of central bankers at a large round table on a lower floor of the BIS building, which is shaped like a rook chess piece. Staff members sit nearby at desks decorated in white leather.

...

The Bank of England's Mr. King leads the dinner discussions in a room decorated by the Swiss architectural firm Herzog & de Meuron, which designed the "Bird's Nest" stadium for the Beijing Olympics. The men have designated seats at a round table in a dining area scented by white orchids and framed by white walls, a black ceiling and panoramic views.

 

"It is a way in which people can talk completely privately," Mr. King said in an interview. "It is a big advantage if you have some feel for how central banks think about questions, what they're likely to do in the future if certain events were to occur."

 

Serious matters follow appetizers, wine and small talk, according to people familiar with the dinners. Mr. King typically asks his colleagues to talk about the outlook in their respective countries. Others ask follow-up questions. The gatherings yield no transcripts or minutes. No staff is allowed.

The punchline: a handful of people from MIT, deeply steeped in economic theory (not practice), the same people whose actions incidentally were responsible for the first great financial crisis, and who yield more power than any potenate in the history of the world - people who, as the ECB showed in the case of Berlusconi, can take down presidents and PMs with the flick of a switch, meet in private. No transcripts or buttlers are allowed.

In other words, they are accountable to absolutely nobody.

Which is to be expected: after all they are conducting the greatest experiment in monetary, geopolitical and social history. If they fail... when they fail, everyone loses.

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GetZeeGold's picture

 

 

MIT......I thought those guys mainly did physics and engineering?

 

Sure you're not talking about MIB?

eclectic syncretist's picture

And if MIT Romney had won the election..........

AlaricBalth's picture

During the glory days of the former Soviet Union, where the military would hold a parade each year to celebrate May Day, leading the procession of tanks, missiles, and bazooka-bearing infantry marching proudly toward Red Square was a row of goose-stepping economists. One spectator turned to his companion and asked, “Comrade, why are there economists marching in this military parade?”, to which his friend replied, “Comrade, do you have any idea how much damage they can do?"

EnslavethechildrenforBen's picture

Your children they are belong to us.

trav777's picture

There are some other connections between most of these bankers and economists that run a little deeper than MIT

mess nonster's picture

The money and the juice go together.

NotApplicable's picture

Question is, why is HilsenRat stirring this particular pot now? Smoke or mirror?

It's almost as if someone is seriously upping the level of the age-old game of "Divide & Conquer." Maybe in an effort to remove the "fiscal" part of the "fiscal cliff" equation?

Interesting times, indeed...

caconhma's picture

"A Handful Of Unsupervised MIT Economists Run The World"

This statement is utterly incorrect and deliberately misleading. All these people work for and are controlled by the Zionist Banking Mafia.

john39's picture

so true... nothing academic about this... organized crime on a scale that few can comprehend.

Zer0head's picture

as a service to ZH readers this link should get you to the full article

http://www.google.com/search?hl=en&q=site%3Awsj.com++++%22Every+two+mont...

Pinto Currency's picture

 

 

"Unsupervised" ??

What exactly is the coordinating role of the BIS?

macholatte's picture

 

 

Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.

 

Who pays for the dinner, lodging, transportation and hookers?

And how many "staff"?  Are we talking a half dozen guys or a hundred?

 

Just curious.

 

 

Michaelwiseguy's picture


Ho, Ho, Ho! 9/11 Was An Inside Job!

Seasons greeting from your old friend Santa! My, my, Christmas is just two short weeks away, and everyone here at the North Pole can't wait to deliver presents to all you nice boys and girls this year. Yes, Jolly ol' St. Nicholas hopes you're all being as good as can be!

But today, Santa would like to tell you all about something very naughty, something very, very naughty indeed. Dear children, have you not heard? Why, 9/11 was an inside job! Oh, ho, ho, my, yes it was!

I mean, look at the facts, boys and girls! We already know the Bush administration was itching to go to war in Iraq, now, don't we? Yes, indeed we do, my darling ones! The Downing Street memo proves that beyond a shadow of a doubt. Then you look at the Presidential Daily Briefing of Aug. 6, 2001, the one headlined "Bin Laden Determined to Strike in U.S." Ignored! Why, children, they threw that briefing aside like used wrapping paper on Christmas morning, didn't they?

And remember, sweet little ones, Bin Laden never claimed responsibility for the attacks until 2004. Do you know how many years that is, boys and girls? Something was up the government's sleeve, and I'll let you in on a little secret: It wasn't sugar plums, oh, no! No, it was the ties between the bin Laden and Bush families. They've been under the mistletoe for decades, if you catch your old pal Kris Kringle's meaning! I've checked my list twice, and it seems Arbusto Energy, a Bush business, had financial connections to Salem bin Laden, half-brother of Osama. The CIA actually helped create and fund al-Qaeda right around the time Bush Senior was the agency’s director—ho, ho, ho, ol' H.W. stuffed their pockets as fat as a Christmas goose!

'''''''

Perhaps this Christmas, Santa will bring some of you very well-behaved—and discreet—young children some nice, shiny new computers to play with, so you can go to 911truth.org, watch "Loose Change" on YouTube, and see for yourselves. Because if you ask Santa, the truth needs to come out in order to properly honor the memory of the victims and awaken a duped populace, slumbering away in their cozy beds, living in dreamland. We can close our eyes and drink the government eggnog, or we can raise our voices and demand to know what really happened. Isn't that right, boys and girls?

Well, I've still got a lot of toys to build before Christmas Eve, my little ones, but I'll be visiting you all very soon—ho, ho, ho, that is if I'm not jailed as an enemy combatant for asking simple questions!

Because that's what they fucking do, you know.

http://www.theonion.com/articles/ho-ho-ho-911-was-an-inside-job,30705/

LEAKED VIDEO OF CRUISE MISSILE HITTING PENTAGON ON 911 RARE FOOTAGE

http://www.republicbroadcasting.org/index.php?cmd=news.article&articleID=4602

Antifaschistische's picture

you got it Trav...my thoughts exactly

clymer's picture

Oh Unwashedmass, you must comment on this article

Dalago's picture

So THESE are the terrorists!  Got it!

TruthInSunshine's picture

 "MIT......I thought those guys mainly did physics and engineering?"

 

MIT is also heavily involved in the developing new, innovative and efficient ways-to-kill-human-beings-industry. IOW, Big Defense has co-opted a huge portion of their resources.

Kobe Beef's picture

How charming. I wonder if one could ignite an intramural scrum, split the ranks, pit Big Defense against Big Banking somehow.

For the record, I never signed any "Informed Consent" Papers to be a Test Subject in some massive MIT Socio-Economic Experiment. Surely its just an ethical oversight.

formadesika3's picture

Exactly. How can they be taking risks when it's OPM they're risking?

LawsofPhysics's picture

When there are no real consequences for an individual's (or club's) bad behavior that is essentially a form of absolute power.  Make no mistake, absolute power corrupts, absolutely.    History shows exactly how this power will get rebalanced, hedge accordingly.

Michaelwiseguy's picture
United Nations tells Israel to let in nuclear inspectors

The resolution, approved by a vote of 174-6 with 6 abstentions, calls on Israel to join the Nuclear Nonproliferation Treaty “without further delay” and open its nuclear facilities to inspection by the International Atomic Energy Agency. Those voting “no” were Israel, the U.S., Canada, Marshall Islands, Micronesia and Palau.

http://english.alarabiya.net/articles/2012/12/04/253250.html

Doomer's picture

Makes one wonder if being an amoral psychopath is a requirement to get in.

michael_engineer's picture

I just noticed this. When did trav get back?

Cathartes Aura's picture

same time RoboT did - interestingly enough. . .

candyman's picture

reunion, it only happens once or twice a year.

Cathartes Aura's picture

y'gotta laugh tho'

I mean, do they have ZH-Batphones?

"dudes, we needs ya!!! get back in here & stir some shit!!"

it's like their accounts. . .are. . . yeah.

tbone654's picture

same dude...  two e-mail accounts...  two zh accounts... easy, see it all the time...  ??

Cathartes Aura's picture

but not two beloved old-timer Hedg'rs???

blasphemy!

 

((mind goes to just who might be the account-holder, such timely resurrections))

AnAnonymous's picture

There are some other connections between most of these bankers and economists that run a little deeper than MIT
_______________

All of them are indo-europeans? All of them are 'americans'?

Stock Tips Investment's picture

I think one of the serious problems of the world, has to do with this topic. I do not see much counterpart among economists and analysts. Almost all the monetary authorities in the world, given as an unquestionable truth, the role of governments in resolving the crisis. Everyone wants more government spending. First, as far as the possibility of debt allows. And then, as far as the tax increase to support it. I do not see an active opposition against this nonsense. Consequently, problems continue.

NoDebt's picture

Agreed- the lack of anyone pushing back is perhaps one of the most troubling aspects of the current situation.  Anyone CREDIBLE, I mean, not us ZH monkeys.

The only thing that I can possibly imagine WORSE than the failure of this experiment would be it's SUCCESS.  Can you imagine the colossal power consolidation that would happen amongst those ranks if they DO save the world?  Who could ever stand against them?  That would be a bad, bad situation.

derek_vineyard's picture

guess everyone either (A) dropped their pants and bent over or (B) bought guns and metals

derek_vineyard's picture

guess everyone either (A) dropped their pants and bent over or (B) bought guns and metals

three chord sloth's picture

No one "credible" CAN push back... by definition. It's circular... belief in the system is a requirement for credibility, and the system doesn't acknowledge anyone not deemed credible.

jayman21's picture

The down arrow trolling is getting out of control.  Who would junk such a clever comment?

 

If you are an economist down arrowing, trying reading the blackswan and you might get the joke.  Asshole

indygo55's picture

" If they fail... when they fail, everyone loses. "

Do you mean everyone EXCEPT them?

 

DeadFred's picture

Don't forget Geithner. Anyone who has worn a MIT T-shirt and looked in the mirror knows that it spells 'TIM' backwards.

MassDecep's picture

Well, they have physically engineered the biggest collapse our world is about to see!!!!

NewAmericaNow's picture

MIT, You will never find a more wretched hive of scum and villainy

DaveyJones's picture

They're really mitt. engineers since most folks wear gloves when they subject others to that procedure.

The Shootist's picture

MIT physicists started moving away from human control notions after discovering the nature of quantam mechanics around the forties. Economists at this time moved away from black and white economic principles and embraced false scientific formulas.

Rathmullan's picture

MIT and Harvard Economists are the "intellectual puppets" of an utterly corrupt, crony capitalist "system".

earleflorida's picture

wish it was that simple...

http://www.thezog.wordpress.com/who-controls-the-group-of-thirty/

these people wallow in a primordial cesspool of incestual gratification...

the one thing we've got going for us pleb's, [speak for yourself [?]... sudden tingling in my typing finger?] is that they'll all eventually, fuck each other too insanity!