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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Chupacabra-322's picture

CRIMINALS which make up the Global Crime Syndicate.  The Criminals need to be rouded up, arrested, tried, convicted, hung upside down in public and have their throats slit.  My hypothetical wet dream.

toomanyfakeconservatives's picture

It's not a wet dream. It's about honor and love of country more than money for some highly motivated and patriotic Americans. The U.S. military and U.S. Marshalls will soon do their job and arrest them all...

mayhem_korner's picture



I used to work with - and still keep in touch with - a number of MIT-ers (and LSOE, Stanford, Chicago, and Fuqua grads) who effectively rejected the ideologically-skewed economic theory and modelling they were taught.  Very bright people who saw through the smoke and persistently challenged the meme - especially the quantitative stuff where the equations were mired with inconsistencies and inexplicable residuals (QF people will know what I mean).  So they (and I) made a living in the "underground" working with execs that wanted to understand how to navigate the imposed but faulty monetary and economic systems.  When you work in that "counterculture", you realize that you are up against an incredible mass of mis-information and campaigning - ultimately to defend both the flawed economic system and the flawed higher-education system that feeds it.

The question I'm always left with is how can people so capable of decomposing complex math/logic questions be so inept at seeing the faults in the underlying premise?  How can they be so "smart" and yet so "stupid."

My rant is done.

piliage's picture

>How can they be so "smart" and yet so "stupid."

For the same reason they can let people starve in Greece chasing a 50% internal deflation rather than simply let their Euro experiment stop and do the right thing and let PIIGS devalue. Ideology is blind, and the state is more important than the individual.

The US, until post WWII, had the opposite philosophy, the individual was more important than the state. Those days are LONG gone.



Tsar Pointless's picture

The US, until post WWII, had the opposite philosophy, the individual was more important than the state.


Let's take a trip back through time and ask slaves in the 1850s what they think about that assertion.

Or those people who inhabited the land we violently conquered and named the United States of America. Let's go and ask them.

Lebensphilosoph's picture

White guilt anyone? Slaves weren't citizens and their enslavement was not due to statism. Nor was it so in the case of 'those people', the defeat of whom, I might add, was nothing new or unique in the history of the world. If your ancestors hadn't fought, killed, conquered and pillaged for the benefit of themselves and their own people you wouldn't even be standing here to blather your oh-so cliche moralising blather like the intellectual parrot you are.

Tsar Pointless's picture

Wrong, you goddamn idiot.

Slaves were "3/5" citizens. Or at leas that's what the white supremacists who ran this country back then saw them as being.

"White guilt" is a term invented by those who still hang onto the idea of the white people being the superior race.

And, I wouldn't mind not being here in return for the useless, wanton slaughter of people who did nothing wrong but be born with a "less inferior" skin color.


mayhem_korner's picture



Like so many, you misunderstand the "3/5 citizens" issue.  It was not to discount the worth of the slaves (the fact that they were slaves had, sadly, already done that).  The 3/5ths citizen was put in to dilute the apportionment of representation by slave owners.  If the owners' slave count was included 100%, then those owners with the largest slave holdings would have the greatest voice in the lawmaking process.  The sponsors of the 3/5ths language did not want that.

So...believe it or not, the 3/5ths law was anti-slavery in its intent.  It is misconstrued as something attached to the slaves themselves, which it wasn't.  It was attached to the slave owners.

dscott8186's picture

Spare us the faux self righteousness of your low self worth seeking some long past sin to rail over.  

Instead of railing against a country that repudiated slavery over a hundred years ago, why not actually be against a country that legalizes it today?  No, why not? Search your own empty soul.

Human Rights Day Marred by Election of Slave-holding Mauritania as VP of UN Human Rights Council

UN Watch condemned today’s election of Mauritania, a country that allows 800,000 of its citizens to live as slaves, as Vice-President of the UN Human Rights Council.

Why aren't you libs condemning the UN for its utter hypocrisy?  Like with Obama's incompetence, you avert your eyes believing the ends justify the means thus supporting the very odious things you condemn.

Now as to the 3/5ths comment, obviously you know very little of US history other than the glib one liners.  For what it's worth, I agree that the people who formed the US considered it's formation of higher priority than of slavery.  For this they should be faulted, however, in context the 3/5ths personhood for slaves was a compromise the North allowed to bring in the Southern States to form the union. Were it up to the Northern States at the time, slaves would have NOT been counted AT ALL. The Southern States wanted the slaves to be counted equally to free people.  The whole 3/5ths issue was about representation in Congress not the individual value of a human being.  I suppose that understanding is lost on self righteous people like yourself.  Just as it is lost to you that black people sold black people to the white slavers who brought them to the New World.  But then people like yourself typically ignore the millions murdered under Socialism and Communism.  It's all a part of your trendy empty faux self righteousness.

Vooter's picture

"White guilt anyone?"

Yeah, white guilt--as in WHITES are GUILTY of enslaving black Africans and of intentionally wiping out most of the North American indigenous population. What are you, fucking stupid? least have the balls to own it, you coward (and yes, I'm white).

"...the defeat of whom, I might add, was nothing new or unique in the history of the world..."

Well, there's nothing new about murder, rape and robbery, either--but they still put people in prison for it. What's your point? That everyone should just ignore it because it always happens? convenient for you. I think you may be the most intellectually lazy human being on the face of the Earth, or at least on these boards...

mayhem_korner's picture



So because you are white, you "own" the misdeeds of other, prior generations simply because they, too, were white?  Does that mean that the NY Jets are the Super Bowl Champions because of what Namath did in 1968?  Where's your logic, bub?

Vooter's picture

You "own" it by admitting that it happened, that it was a crime, and that it can't be sloughed off by lazy, facile excuses like "white guilt." If I point out that white people lynched lots of innocent black people during Reconstruction (and well beyond), does that mean I'm exhibiting white guilt, or does it mean that I'm stating a fact? "White guilt" simply means "Please stop mentioning an inconvenient and unpleasant truth."

dscott8186's picture

Since when are the children guilty of the sins of the fathers?  But thanks for playing because you just admitted that you are a racist bigot precisely because you accuse the current generation of wrong doing because of their great, great, great grandfathers.  You are doing exactly what all bigots do, assigning bad motives and inferiority because of someone's genetic heritage.  

How inconvenient was that unpleasant truth?  So much for your empty self serving faux moral superiority.  You are exactly what you hate, a bigot.  In other words, you demonstrate you hate yourself by projecting your hatred on others.

Cathartes Aura's picture

the poster you berate said quite clearly in his post that acknowledging what history shows is the aim, not obfuscating the narrative with "white guilt" nonsense - merely nodding to the records.  if we don't acknowledge what apparently happened, then of course things cannot "change" going forward, and the game is perpetuated.

if we cannot acknowledge what the pictures and stats in the OP have in common, and what those who meet in closed rooms to discuss the global webbed system that is capturing us all have in common, even at the fringes - then how can we eradicate that same system? 

and of course, "we" won't.  but some of us can see the obvious patterns, and some of us might strive to protect ourselves and those we care for, against the obvious predators.

the same ones who have history of these actions, acknowledged.

Diogenes's picture

You've got it backwards. Slavery was normal. Conquest and plunder were normal. Read any good book of history, or even your Bible. You will find slavery was normal and accepted all over the world, for thousands of years, and was never questioned. Then, for the first time, certain European thinkers dared to say that slavery was wrong.

Old white men were the first people in the history of the world to do something to END slavery. They largely succeeded. Today, slavery is only practiced in the most backward parts of the world, by Muslims and brown and black people.

Jugdish's picture

Diogenes: I agree with the first part of your post but we need to be realistic about the second part. Two-thirds or more of the 6 billion people on the planet live today as slaves. Maybe that seems relativist but if you work in a sweatshop for a dollar a day you are a slave. If you work at Mcdonalds for minimum wage you are a slave. You will never own anything and your prospects for ever owning anything are far off if ever in your future. The fact that the blacks were freed in the south in 1863-65 means very little. Like everything legal, it's just a play on words. Slavery is very much alive, a more corporatized-humane form, more psychological in nature than physical perhaps.

Cathartes Aura's picture

perhaps we can come to understand "corporations" as a form of slavery, given how they've evolved and the under-lying control they appear to wield over nationstates.

what is the history of corporations?  where do they originate?

tip e. canoe's picture

From Rome, the trail of the corporate form becomes easier to track, leading, as with many Roman institutions, into the formation and development of the Catholic Church. The dean of English law, Blackstone, shows us the way, pointing to the Roman, “corporations of trade, the universitates, which form then became the basis for the ecclesiastical system.” Indeed, scholars have identified the use of the corporate form in almost every aspect of the development of the Roman Catholic Church, including the monasteries, convents, cathedrals, universities, and, significantly, the military-colonial orders that formed the basis for the Crusades. And while the modern corporation may also have had certain origins in Jewish law, a limited inquiry seems to suggest that the very idea of the corporation was anathema to early Islamic law.

Cathartes Aura's picture

uh huh.

so it looks more like the dudes in the picture?

and less like the people being murdered in the new crew-sades?

just trying to line up my ducks.

Umh's picture

Neither of those groups were "people" then.

piliage's picture

OK. For the sake of argument, slavery was enforced by states rights, exercised by individuals more often than not at the state or territorial level (certainly in the case of slavery). It was the lack of centralized federal authority that let slavery continue.

piliage's picture

Yes, that's right. I said I'd rather have states rights than a bloated central government. It's called accountability, and it may lead to stupid shit being done locally. Oh well, down arrow for individual liberty, for fuck's sake some people are begging to be treated like the gimp in pulp fiction by the government...



Colonial Intent's picture

The question I'm always left with is how can people so capable of decomposing complex math/logic questions be so inept at seeing the faults in the underlying premise?

It's called cognotive dissonance.

Pareto's picture

Greed, and unaccountable greed, evidently, is good.  As someone already noted, that greed will drive the economy into the fucking ground.  And the experimental pinheads who thought that they could count the number of fairies that dance on the head of a pin will quietly disappear into the night.

Cathartes Aura's picture

greed, and power over.

fist in glove.

Cursive's picture

Would self-respecting people let a secret society of private bankers control the national money supply?  The answer is no, but Americans, for all of our false bravado and faux freedom-loving, are not a self-respecting people.

Tsar Pointless's picture



Amerikkkans have no respect for themselves, or their "culture". No shock that they have no respect for others or their cultures.

They hate themselves. It stands to reason, they hate everyone else.

And, yes, I know I live in Amerikkka. I just don't consider myself to be Amerikkkan.

piliage's picture

How badly have these guys fucked up the markets? Germany announces today they are dropping back into recession and industrial output is circling the drain, and the DAX rallies half a percent on the hopes of more free money from the Bernanke.

Can we practice forced sterilization on these assholes?



buzzsaw99's picture

god will kill all but 144k

mayhem_korner's picture



Negative.  You need to read the next verse of that chapter, BS.  It's Revelation 7:9, btw...

buzzsaw99's picture

the vast majority end up in hell that's all i know for certain. that surely includes ALL joos, bankers, and billionaires ;)

mayhem_korner's picture



No one ends up anywhere based on what they "do".  And you and I are no different than "bankers" and "billionaires".  There is no difference (Rom 3:23).

proLiberty's picture

And the moral framework of the operative economic theory is that government owns the citizen, if not literally than at least to the extent it has the power to manipulate the value of the money he holds, the power to tax away his assets and all future income, and the power to manipulate the time value of the money it forces him to use.   In a different context these people would be dangerous pirates who were hardly worthy of the Hellfire missile we would happily launch at them the next time they huddled to plan their next attack on our wealth and prosperity.



orangedrinkandchips's picture

No matter how much money they have, they die the same way we all do!!!



MajorWoody's picture

Oh and the Chicago school of IMF is soooo much better, puh-leeze


toomanyfakeconservatives's picture

MIT (and Harvard among others)... educating and empowering enemies of the Constitution for the longest time.

PUD's picture

MARKETWATCH...U.S. stocks rise on thoughts of Fed move ahead



Tsar Pointless's picture

You got a click on the green arrow from me.

Now that's fucking funny.

riphowardkatz's picture

Say what you will

Bernanke Critics Can’t Fight Bonds Showing No Inflation"

piliage's picture

Ask the Chinese and those in the west on a fixed income having to spend most of their disposable cash on food how there is currently 'no inflation'.

Our real world Price basket of goods shows an increase of over 45% from May 2008 to September 2012 far above published inflation figures.




janchup's picture

I feel better. They are all so smart.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

These guys are all puppets.  Overeducated globalist puppets who renounced their U. S. citizenship when they started performing fillacio on the Rothchilds and the rest of the demonati!


holdbuysell's picture

Good article.

The BIS being the central banks' bank, I'm surprised that so little is mentioned about it (or perhaps I shouldn't be in retrospect). Someone posted this link here before, which is an intro to what it is.

dcj98gst's picture

Market watch wants you to ask Bernanke a question.  See here:


Mine was the following:

When the current bond bubble bursts and the american economy is destroyed, what color would you like your jail cell to be painted?  Believe me you will want to be there.  The citizens will want your head on a stick


Rose_Colored_Glasses's picture

reads like a Ian Fleming novel - is bernanke Blofeld?

caShOnlY's picture

A Handful Of Unsupervised MIT Economists Run The World

..... and one drone floating nobel peace prize winner.

Colonial Intent's picture

Obama runs the world?

In your dreams maybe.