What was to be A Long Walk down 20th.

On June 7th, 1494,  Portugal and Spain signed a treaty that divided the non-Christian world between them.  This was adorable, hilarious, and selfish.  94 years later, English fireships (presumably these were wooden boats that launched fire and not an unholy manifestation of hell's navy temporarily aligned with Elizabeth I) and Dutch flyboats (again, we presume these were actually floating boats and not holy manifestations of heaven's flying navy temporarily aligned with the Dutch Republic) destroyed the Spanish Armada and that was the last that anyone ever heard from Spain until Hemingway started drinking there and European Football became popular.

In July 1944, as the Second World War was fitfully winding down, it was time to divide the world up again, not to decide who would plunder which indigenous people's homes but to divide up the responsibility of ensuring global order and prosperity (Goldman and Sachs would come by later for the plundering).  730 delegates from all 44 allied nations met in a hotel in New Hampshire and established two main organizations

International Monetary Fund (IMF) tasked with fostering economic growth and cooperation by providing policy, advice, and financing to its members; and later, funding Mr. Phelp's Impossible Mission Force to defeat evil organizations and make Tom Cruise look taller than he is.

International Bank for Reconstruction and Development (IBRD) Which we know better today as part of the World Bank, tasked with providing loans to devoping nations and providing riots to cities where it has its meetings.

After these meetings, New Hampshire had largely served it's purpose, but it was decided we would keep it around for sentimental reasons.

I'm not sure that it's in the charter, but traditionally the IMF is headed by a European and the World Bank is headed by an American, but both headquarters are still in Washington D.C.

The IMF has a board of governors that is made up of a Governor from each country (except the smaller ones which gets a governor to represent several of the countries) as well as a Alternate Governor.  For the US, the Governor is the Secretary of the Treasury, and the Alternate Governor is the Chair of the Federal Reserve.


And so, I tell you that story to tell you this one: when the IMF delivers a public report saying that the US Federal Reserve (whose friends call it The Fed not unlike Brittney Spear's ex-husband) should not raise interest rates, we are in part hearing about the recommendation following a thorough analysis, but mostly we are watching the theater of global finance.

The head of the IMF (Christine Lagarde) works for a board that the head of the Fed (Janet Yellen) sits on.  Along with Angela Merkel (arguably the most powerful woman in the world: politically, physically, and magically) these are the two most influential women in global finance.  They work 5 blocks from each other.  It's a $6 to $7 dollar Uber trip down 20th street.  If they don't talk to each other twice a week or more I would be shocked.

If Christine Lagarde really wants Janet Yellen to have her input she calls her; on her cell phone.  The recommendation we read this week is driven as much by political exigencies as economic review, and the decision of the Fed should be largely independent of that.