Aug. 25 (Bloomberg) -- Once a year at the end of August, the notable and quotable from the worlds of business, finance, academia and government trek to, if not up, Wyoming's Teton mountain range to attend the Federal Reserve Bank of Kansas City's Jackson Hole Conference.

Whether it's the elevation that goes to their heads or an elevated sense of importance they get from rubbing shoulders with central bankers in shorts, the attendees treat the event like the annual pilgrimage to Mecca.

The Kansas City Fed adds to the cachet by shrouding the event in secrecy. The agenda isn't posted on the Web site; registered guests and media covering the event have access to a password-protected site. The papers presented at last week's conference won't be accessible until sometime this week, according to the Kansas City Fed's public affairs office. (Academics could perish by the time the Kansas City Fed publishes.)

All this secrecy in the age of transparency left me to ponder conferences past. Perhaps there was something to be gleaned from the topic selected for this once-a-year Fed symposium? Was it a leading, lagging or coincident indicator of the economic times?

After all, the Fed is in the business of setting monetary policy. Because adjustments in interest rates and the money supply operate with a long and variable lag, the Fed is, by definition, in the forecasting business. It has to anticipate tomorrow in determining where to put the overnight benchmark interest rate today.

Last War

So how good is the Fed in anticipating the economic issues facing the U.S. and global economy?

A quick glance at the topics since 1978 suggests, not very.

The 2007 symposium, ``Housing, Housing Finance and Monetary Policy'' was definitely timely. Still -- and even allowing for the lag between the selection of the topic and the event -- it's probably more accurate to say an examination of the interaction among housing, housing finance and monetary policy came well after the horse was out the barn door. In fact, the barn went down in flames.

In 1995, the symposium was devoted to ``Budget Deficits and Debt: Issues and Options.'' The discussions focused on the problems associated with chronic deficits and potential solutions.

In short order, the U.S. government produced a surplus for the first time in 30 years. The surpluses lasted from 1998 through 2001. Deficits are now back. Put the 1995 symposium in either the fighting-the-last war category or long-leading- indicator category.

Global Cooling

The first four years (1978-1981) of the Kansas City Fed's conference were devoted to agricultural issues. Droughts in the Midwest may have inspired 1979's symposium on ``Western Water Resources: Coming Problems and the Policy Alternatives.'' The papers looked at subjects such as ``water policy'' and how to augment supply.

Sound familiar?

``Access to fresh water was a big deal,'' says Michael Aronstein, president of Marketfield Asset Management in New York. ``At the top of a bull market, everything is always `limited.'''

Of course, back in the 1970s global cooling was the rage. The April 28, 1975, edition of Newsweek magazine reported ``ominous signs'' that the earth's weather patterns had begun to change dramatically, portending everything from a ``little ice age'' to food shortages and famine.

Among the more spectacular solutions proposed for global cooling was melting the polar ice cap. Talk about an inconvenient truth ahead of its time.

Serial Bubbles

In 1999, the Jackson Hole conference was devoted to ``New Challenges for Monetary Policy.'' Specifically, the program was focused on the conduct of policy in a low-inflation environment and the proper response to movements in asset prices.

Bingo! For once the Fed was prescient.

In August 1999, the technology and Internet stock bubble was about to embark on its last, monetary-fuel-injected run. The Nasdaq Composite Index almost doubled in value between the Jackson Hole conference and early March.

While the Fed gets a good mark for its timing, it receives an offsetting demerit for its failure to grasp the ``new challenges'' for policy, the most important of which was mitigating the effects of a burst stock-market bubble without inflating a new one in housing. A for conception, F for execution.

Non-Automatic Stabilizers

``Income Inequality Issues and Policy Options'' in 1998 foreshadowed what was to become a big political issue in the 2008 presidential election. In terms of the policy options for the central bank, the achievement of price stability and maximum sustainable growth, along with stabilizing the financial system, are enough for one institution whose main policy tool is a short- term interest rate. The redistribution of income isn't the role of monetary policy. (It's not the role of fiscal policy, either.)

Which brings us to the 2005 symposium, ``The Greenspan Era: Lessons for the Future.'' Alan Greenspan's 18-year tenure as Fed chief was drawing to a close. He was feted as ``the greatest central banker who ever lived'' in a paper presented by Princeton University's Alan Blinder.

Blinder is a discussant this year, not a presenter.

And as for the lessons of the Greenspan era, this year's Jackson Hole symposium, ``Maintaining Stability in a Changing Financial System,'' says it all.

(Caroline Baum, author of ``Just What I Said,'' is a Bloomberg News columnist. The opinions expressed are her own.)

To contact the columnist on this story: Caroline Baum in New York at cabaum@bloomberg.net.

Last Updated: August 25, 2008 00:05 EDT