PARTICIPANTS
Jacob Frenkel, Adam Gilbert, Barry Zubrow Gary Becker, Michael Boskin, Andrew Crockett, Joe Grundfest, Stephen Langlois, Ken Scott, George Shultz, John Taylor, Ian Wright
ISSUES DISCUSSED
Jacob Frenkel, current chairman of JP Morgan Chase International and Chairman of the Board of Trustees for the Group of Thirty (G30), discussed the current state of global economy and his concerns pertaining to the U.S. recovery from the financial crisis.
Frenkel began by posing the question of whether leverage is more effectively regulated when it is present in the private sector or the public sector. He shared his view that the U.S. Federal Reserve may have created more problems than solutions by transferring debt and toxic assets from private balance sheets to public balance sheets, because the public sector is much less capable of reversing its positions and does not have some of the natural checks markets provide the private sector. Frenkel also said that since the Federal Reserve found policy instruments to be weak in the recession they created another policy instrument in quantitative easing (QE) and that this may have set a dangerous precedent for the activist role the Fed may play in any future economic downturns. He argued that the role of the central bank is to offset the structural biases the government creates, and that the “right” way to do policy is to always have a long-run strategy, rather than simply taking the action best-suited to the moment.
Frenkel also reviewed several key economic indicators such as global unemployment rates and the demography of Europe and recommended policy-makers dissect economic indicators to understand what to do to fix problems, rather than just using them to say there are problems.
