Helicopter Ben Shalom Bernanke gives his “insights” into the future for a quarter of a million bucks. We’ll pass!

It seems that our old friend Mr Ben Shalom “Helicopter” Bernanke is well and truly milking his notoriety. From being arguably the joint worst Fed Chairman ever (Alan Greenspan being the other – notice anything in common?) he is now plying his wares on the international speaking circuit where he appears to be finding a ready audience amongst the banksters and hedge fund managers that his ‘print and be damned’ policies have so enriched… Indeed, so in demand is his particular brand of “wisdom” that he is said to be receiving upto a cool quarter of a million dollars for a few hours speaking! Contrast this with the mere $200,000 a year he was earning at the helm of the Fed. Nice work if you can get it eh?

In a series of dinners with selected investors where a ticket to attend sells for a quarter million bucks, “Helicopter” Benny is purportedly giving his “insights” about the future of monetary policy. The likes of Paul Tudor Jones and Michael Novogratz have been more than happy to pay for these dinners (I wonder who picks up the actual dinner tab?!) as hedge fund managers en bloc are struggling to make a profit this year and with the so called “expert networks” now seen by the SEC as just plain ol insider trading, they need new clues about the markets likely direction!! So, they reason that for a few hours with “the Bernank”, the cost of $250,000 is likely to be money well spent (we’ll keep a close eye on their performance this year…).

We would surmise that the payees are not paying to hear Bernanke wax lyrical about the minutiae of monetary policy, but rather that they’re paying because they believe Bernanke will provide them with information that “no one knows about”. While Bernanke is of course no longer an insider at the central bank, he did serve as chairman for quite a long time and he is the main architect for the current policy of the Fed. If anyone knows about the weaknesses and strengths of the current policy, that is Bernanke himself.

From the notes taken by investors and revealed to the wider public, it seems Bernanke is predicting that the FED will only very slowly move to raise interest rates and it will probably do that quite some time after the labour market has “normalised”. One of the dinner attendees in fact came away with the impression that the FED’s main benchmark rate won’t rise to its long-term average near 4% in Bernanke’s lifetime (oh really!?). In looking at the chart below, we can clearly see that during the last 30 years there has been just one direction for interest rates and that is south. Of course, now it has hit the boundary of ZIRP (Zero Interest Rate Policy), there is only one way for it to go. And that is up.

Frankly, what Bernanke has said during these dinners with investors is nothing new to us and to our readers at SBM. America is boxed into remaining with monetary easing and the low interest rates that they have been pursuing for nearly 6 years now and the instant the FED changes it, the economy would at the very least swoon and potentially equity markets crater. My advice to Tudor Jones? Don’t bother spending a quarter million for this “insight” – give it to charity instead!

Let us state three important things about these meetings. First of all, hedge fund managers (in aggregate) have no better clue about the future than you or I. Secondly, it must be observed here that the advantage these investors are receiving, if indeed they do actually obtain one, is an unfair one. They are paying someone to receive privileged information. Last time I looked at the law statutes thus was illegal. Given that the number one creator of the current monetary policy has only been out of office for a few months, he is still an insider, at least in our view and should be prevented from attending such meetings where he discusses the future of his past actions. Thirdly, if you don’t have the money to attend these dinners then don’t worry because it appears that all Bernanke has been saying we have already discussed several times in past blogs. Go out and buy a fine Montrachet, Sassacaia, Petrus or Screaming Eagle with the money and settle down for a night in with SBM!!