The financial conference circuit has been a noisy place lately.
Just over a week ago there was historian Niall Ferguson claiming that because John Maynard Keynes childless and gay, it was only logical that his thinking was short-term.
And then last week, there were two separate hedge fund events: The Ira Sohn Conference in New York City (where hedge funders reveal their favourite investment ideas) and The SALT Conference in Las Vegas (which is more of an industry confab.
At both of those hedge fund events, Ben Bernanke took a lot of abuse from the speakers.
The source of this Bernanke hate has been the subject of a lot of fascination and speculation (from ourselves, Brad DeLong, Paul Irwin, and others). Everyone has a slightly different theory. Maybe these managers have become inflation haters, like other folks their age. Maybe the Bernanke-fueld market boom has made their more sophisticated strategies irrelevant. Maybe it’s just purely conservative politics coming out.
But there’s another important angle which has been left out of all of the discussions: Flattery.
If you’re a speaker at any event, a really good strategy is to flatter the crowd.
And a good way to flatter any crowd is to convince that crowd that they’re all smarter than the man in DC running the show.
At the same conference where Ferguson did his thing, famously bearish economist David Rosenberg gave a presentation on how the Fed couldn’t save the economy.
It included cartoons like this one, featuring Bernanke looking like a goofball, swimming in a pile of cash, engaged in monetary policy that somewhat resembles what people think about when they think of Weimar hyperinflation.
Now we weren’t at Rosenberg’s speech, but we’ve seen Rosenberg speak before, and we’ve been to other financial industry events where presenters made Bernanke look like a fool (often using similar cartoons), and we can say one thing’s for sure: people eat this kind of stuff up.
It’s pretty similar to the Keynes bashing.
If you’re in a roomful of wealthy financial types, any kind of government bashing or planner-bashing will just go over well. It’s flattering to be told that everything would be great if you (the audience) were just left to your own devices, and that it’s these bearded academics who are screwing things up. If only the government would step out of the way and let us efficiently allocate our capital, then the economy would prosper!
That is an incredibly flattering message to be told. And the bashing of elites (as idiots who are screwing everything up) explains the popularity of some of the biggest finance world talking heads.
Almost everyone who speaks at events is selling something (trying to raise money for a fund, selling books, selling a newsletter, etc.) and so bashing the economic planners who seemingly get in the way of the audience is a great sales device. The speakers all may have economic ideologies that cause them to hate Bernanke or Keynes. And they might even invest based on those ideas (though not always). But flattery and salesmanship are key.