Os banqueiros centrais que afundaram o mundo - Liaquat Ahamed lido por Maurício Santoro Rocha

Já li esse livro, e recomendo os interessados comprar uma edição americana na abebooks.com: mesmo pagando três vezes mais o frete em relação a um preço provável de 4 dólares, ainda sai mais barato que uma edição brasileira, nova ou usada.

Por outro lado, Keynes pode ter sido um heroi nos anos 1920 e 30: mas ele construiu o sistema que vive em crise, desde pelo menos três ou quatro décadas.

Paulo Roberto de Almeida 

Resenha de “Lords of Finance: The Bankers Who Broke the World”, de Liaquat Ahamed, por Maurício Santoro Rocha

Mundorama / by Equipe de Colaboradores 

/ 30/11/2013

Durante a crise asiática, Liaquat Ahamed olhou com apreensão uma capa da revista Time com fotografias de autoridades econômicas com o título “o comitê para salvar o mundo”. Economista formado em Harvard e Cambridge, com longa carreira como banqueiro de investimentos, Ahamed pensou no fracasso dos titulares dos bancos centrais dos Estados Unidos, Grã-Bretanha, França e Alemanha em enfrentar a Grande Depressão da década de 1930. Do desconforto nasceu o excelente livro “Lords of Finance: The Bankers Who Broke the World”.
As biografias dos quatro protagonistas se entrelaçam com os dilemas de seus países. Montagu Norman, da Grã-Bretanha, era um aristocrata herói da guerra dos bôeres.Émile Moreau , da França, tecnocrata da prestigiosa Inspetoria de Finanças. Benjamin Strong, dos Estados Unidos, executivo de Wall Street que participara da organização tardia do Fed, após a sucessão de crises que afligiu“o primitivo, fragmentado e instável sistema bancário” (p.52) do país. O personagem mais interessante é Hjalmar Schacht, raro exemplo de self-made man da Alemanha imperial. Brilhante, mas de ambição desmedida, que o levou à aliança com os nazistas. O economista John Maynard Keynes foio contraponto ao quarteto, na qualidade de intelectual em ascensão cujas opiniões críticas desafiavam a ortodoxia com a qual os banqueiros tentaram lidar com a Grande Depressão.
Ahamed começa a narrativa com a crise financeira decorrente da Primeira Guerra Mundial. O conflito causou sérios distúrbios ao comércio internacional e ao funcionamento das economias européias. Para financiar gastos militares, os governos recorreram a aumentos de impostos, empréstimos (“O mais pernicioso e insidioso legado econômico da guerra foi a montanha da dívida na Europa”, p.100) ou simplesmente emissão monetária. A inflação disparou: os preços se multiplicaram por dois na Grã-Bretanha, três na França e quatro na Alemanha, abrindo caminho à catastrófica hiperinflação da década de 1920.
Outro problema: as excessivas reparações que os vencedores impuseram à Alemanha no Tratado de Versalhes. A impossibilidade de honrá-las levou a uma série de conflitos políticos, como a ocupação francesa da Renânia, fomentando o extremismo político. Tentativas internacionais de limitar as reparações – os Planos Dawes (1924) e Young (1929) – tiveram impacto positivo, mas criaram na Alemanha uma perigosa dependência ao capital estrangeiro. A fonte secou após a quebra da bolsa de Nova York e o medo de novo colapso da economia contribuiu para a vitória de Hitler.
Um tema que perpassa a obra é a dificuldade das autoridades financeiras em se adaptar às novas realidades. Ahamed examina de maneira magistral como os esforços para retomar o padrão-ouro (símbolo de confiança e estabilidade) após a I Guerra Mundial resultaram em erros e problemas de coordenação internacional. Uma das melhores anedotas do livro é a bronca que o ator Charles Chaplin deu no então secretário do Tesouro britânico, Winston Churchill, pela decisão de retornar ao ouro com um câmbio sobrevalorizado.
Porém, Ahamed presta homenagem a Benjamin Strong, que “mais do que qualquer um, inventou o moderno banqueiro central” (p.171), criando diversos dos métodos usados para tentar estabilizar economias, e o fez no contexto de um Fed ainda bastante frágil, cindido por conflitos internos. A história sobre como Schacht derrotou a hiperinflação alemã, por meio da criação de uma moeda indexada (o Rentenmark) é bastante conhecida, e narrada com competência pelo autor, bem como o posterior serviço de Schacht sob os nazistas, no qual conseguiu conciliar o combate ao desemprego com controle da inflação, mesmo em meio à Grande Depressão.
Ahamed é crítico do modo fechado pelo qual os banqueiros centrais – “o clube mais exclusivo do mundo” – operavam, e de como seus procedimentos estavam cada vez mais fora de sintonia com as pressões democráticas por transparência e prestação de contas à opinião pública. Tais fracassos ficaram evidentes na incapacidade de prevenir a crise de 1929 e na absoluta desordem e falta de cooperação que se seguiu, com os EUA, cada vez mais isolacionistas,culminando na conferência de Londres (1931) que “provou ser um completo fiasco, o último daquela longa lista de cúpulas desastrosas que começaram em Paris em 1919” (p.466).
Nesse sentido, Keynes é de fato o herói do livro, com sua atuação aberta por meio da imprensa e dos livros, construindo as idéias que resultaram nacúpula de Bretton Woods, em 1944, e na criação de instituições econômicas internacionais que colaboraram para a prosperidade sem precedentes do mundo do pós-guerra.

AHAMED, Liaquat. Lords of Finance: The Bankers Who Broke the World. Nova York: Penguin, 2009, 564 p. ISBN 978-I-59420-182-0

Maurício Santoro Rocha é Doutor em Ciência Política pelo Instituto Universitário de Pesquisas do Rio de Janeiro -  IUPERJ e Especialista em Políticas Públicas e Gestão (Mauricio.Rocha@mdic.gov.br).

Os donos do dinheiro: como quebrar o mundo, sem ter a intencao de faze-lo...

Eu li o livro em questão, Lords of Finance, que no Brasil se chamou, creio, Os Donos do Dinheiro...
Instrutivo, saber como poucos homens, podem decidir a sorte de milhões de outros, com suas decisões baseadas, por vezes, em sólida economia, muitas vezes em preconceitos e equívocos...
Paulo Roberto de Almeida

Lords of Finance: The Backroom World of Central Banking
by Dan O'Connor
Mises Daily, February 19, 2013

Lords of Finance: The Bankers Who Broke the World
Liaquat Ahamed
 Penguin Books, 2009

The Pulitzer Prize-winning book Lords of Finance: The Bankers Who Broke the World reveals the destructive, surreptitious, incestuous, and highly corrupt nature of central banking. Although the author, Liaquat Ahamed, exposes the current financial system for all of its evils, this book is by no means a critique of central banking. Ahamed’s views are very much representative of status-quo economists of the past 100 years. He references John Maynard Keynes frequently without mentioning Nobel Prize-winner F.A. Hayek once, even though Hayek was Keynes’s greatest intellectual opponent during this period. Despite its mainstream focus the book is interesting and well-written. One of the jewels here is the rare look into the lives of the powerful men, the “lords of finance,” who were behind the solidification of modern central banking in the US and Europe during the years 1910 to 1935.

Ahamed writes,
Central banks are mysterious institutions, the full details of their inner workings so arcane that very few outsiders, even economists, fully understand them. Boiled down to its essentials, a central bank is a bank that has been granted monopoly over the issuance of currency.… Despite their role as national institutions determining credit policy for their entire countries, in 1914 most central banks were still privately owned. They therefore occupied a strange hybrid zone, accountable primarily to their directors, who were mainly bankers paying dividends to their shareholders, but given extraordinary powers for entirely nonprofit purposes. (p. 11)

Since these banks exert such a tremendous amount of influence over the economy and the government, they require a greater level of exposure.

Hidden Influence
Central banks have existed for hundreds of years and still very few people understand their inner-workings. Americans resisted central banking until 1913, when, with the creation of the Federal Reserve, the responsibility of the nation’s finances (budget, taxes, and debt) shifted away from Congress—with its 535 elected representatives—into the hands of the central bankers.

With the central-banking lords firmly in control in the US and England, they helped to finance World War II via central bank inflation. Then at the end of the war, these same bankers advised the politicians on who to send to the Paris Peace Conference as negotiators. Out of this conference came the harsh penalties against Germany that would bring enormous hardship to the German people for the next generation.

In the interwar period, Congress set up commissions to deal with the aftermath of the war, debt negotiations, and to oversee the banking system. However, the central bankers such as Benjamin Strong, George Harrison, Eugene Meyer, and Andrew Mellon, were successful at blocking attempts at congressional oversight.

Central banks across Europe shared a very similar aversion to public oversight. Montagu Norman, Governor of the Bank of England, was considered “the most eminent banker in the world” and at the same time he
... was generally wary of the press and was infamous for the lengths which he would go to escape prying reporters—traveling under false identity; skipping off trains; even once, slipping over the side of an ocean vessel by way of a rope ladder in rough seas. (p. 1)
Norman had a reputation for remaining cool and collected. Then late in 1929 the British government created a committee to investigate the workings of the Bank of England. “That he and the Bank were now to be subject to the spotlight of public scrutiny filled him with dread.… [T]wo days before he was due to testify, he predictably collapsed.” The secret motto of the Bank of England was “Never explain, never apologize” (p. 371).

This elusiveness is characteristic not only of Norman and the high-ranking governors, but is shared by those private bankers who have always been closely associated with central banks. Even prior to the formation of the US Federal Reserve, operations of the bank’s key creators were deliberately kept hidden from the public, and all meetings were held behind closed doors.

The most significant of these closed-door meetings took place over a ten-day period in November 1910, at Jeykll Island, Georgia. The agenda for this meeting was the planning of the Federal Reserve System.
Henry Davidson (J.P. Morgan’s partner) was worried, and for good reason, that any plan put together by a group from Wall St. would immediately be suspect as the misbegotten product of a bankers’ cabal. He therefore chose to hold the meeting in secret on a small private island off the coast of Georgia—in effect creating the very bankers’ cabal that would have aroused so much public suspicion. The preparations were elaborate. Each guest was told to go to Hoboken Station in New Jersey on November 22 and board Senator Aldridge’s private railroad car, which they would find hitched with its blinds drawn to the Florida train. They were not to dine together, nor meet up beforehand, but to come aboard singly and as unobtrusively as possible, all under cover of going duck hunting. As an added precaution, they were to use only their first names. Strong was to be Mr. Benjamin, Warburg Mr. Paul. Davison and Vanderlip went a step further and adopted the ringingly obvious pseudonyms Wilbur and Orville. Later in life, the group used to refer to themselves as the “First Name Club.” (pp. 54–55)

Not one attendee of the Jekyll Island meeting spoke publicly about it for 20 years.

The legislation for creating the Federal Reserve passed Congress shortly before Christmas 1913, when many representatives had already left to go home for the holidays.

There are examples throughout the book of the heads of the world's largest banks conducting clandestine meetings with their respective national treasury and central bank chiefs, immediately prior to, or following, a financial crisis. In these instances, the banking heads maneuvered to not only save their banks, but to obtain more special favors, often in the form of “bailouts.” The bailouts associated with America’s 2007–2008 financial crisis should come readily to mind.

For example, in late 1929, a large group of bankers and George Harrison of the New York Fed,

...gathered at the library of Jack Morgan's house at Madison Avenue and Thirty-fifth Street, the scene of his father's legendary rescue of the New York banking system in 1907.

In an operation made possible by Harrison's promise to "provide all the reserve funds that may be needed"...
Over the next few days…New York City banks took over $1 billion in brokers’ loan portfolios. It was an operation that did not receive the publicity of the Morgan consortium, but there is little doubt that by acting quickly and without hesitation, Harrison prevented not only an even worse stock collapse but most certainly forestalled a banking crisis. Though the crash of October 1929 was by one count the eleventh panic to grip the stock market since the Black Friday of 1869…it was the first to occur without a major bank or business failure. (p 360)

Prior to the Fed’s establishment, businesses big and small went bankrupt during panics. Under the Fed, well-connected businesses were propped up at the expense of small businesses and taxpayers.
Secret meetings between elite private bankers and the heads of the central banks had become a common phenomenon by the 1930s.

On Friday, May 8 [1931], the Credit Anstalt, based in Vienna and founded in 1855 by the Rothschilds, with total assets of $250 million and 50 percent of the Austrian bank deposits, informed the government that it had been forced to book a loss of $20 million in its 1930 accounts, wiping out most of its equity. Not only was it Austria’s biggest bank, it was the most reputable—its board, presided over by Baron Louis de Rothschild of the Vienna branch of the family, included representatives of the Bank of England, the Guaranty Trust Company of New York (J.P. Morgan), and M.M. Warburg and Co. of Hamburg. After a frantic weekend of secret meetings, the government made public on Monday, May 11, at the same time announcing a rescue package of $15 million, which it would borrow through the BIS [the Bank of International Settlements]. (p. 404)

Credit Anstalt later went on to absorb other failing financial institutions across Austria. In America, J.P. Morgan Chase, America’s largest bank, did the same thing during the 2007 financial crisis when it acquired Bear Stearns, Washington Mutual, and others.

Another theme of the book is the highly incestuous nature of central banking. If central bankers were not consorting with political leaders, they were most often found in the company of top private bankers, especially those of the Warburg, Morgan, and Rothschild families. These private bankers benefited from the business cycles caused by their political and banker friends, profiting both during the booms and the busts (thanks to bailouts), while most businesses profited during the booms and suffered during the busts.

Late in 1930, fear arose on Wall Street that one of New York’s largest banks, the Bank of the United States (or BUS, which, despite its name was a private bank with no official status), was going to collapse, because it was insolvent and runs had already begun in the city.

On the evening after the run began on December 10, all of the familiar Wall Street barons—George Harrison of the New York Fed, Thomas Lamont of J.P. Morgan, Albert Wiggin of Chase, Charles Mitchell of National City ( modern-day Citibank) and half dozen of the city’s top bankers—gathered on the 12th floor of the New York Fed to try to put together a rescue package. (p. 387)

Bankers who are not part of the elite lords of finance ambit, traditionally go bankrupt or get acquired during, or immediately prior to, panics (i.e., Lehman Brothers, Wachovia, and Merrill Lynch). BUS did not have close enough ties and was allowed to collapse shortly after the private meeting at the Fed, sparking runs on banks across the country.

Cronyism, on a large-scale, continued as Franklin D. Roosevelt took office. On the first day of his presidency, FDR stepped in to help the banks by closing them in order to stem the tide of bank runs. Roosevelt’s closest advisers were from the elite banker’s ambit, people who encouraged him to ban the export of gold and to confiscate gold from the American people. This was done so that gold would remain in the vaults of the large banks, while the Fed pumped paper money into the marketplace. George Harrison, Bernard Baruch, and Paul Warburg essentially determined Roosevelt’s early banking policies as “Roosevelt did not even pretend to fully grasp the subtleties of international finance” (p. 458). Even though FDR himself did not understand banking practices, policies were implemented in his name that targeted saving banks and providing deposit insurance for the banking industry, while most other industries across the country were rapidly collapsing.

Public Criticism
By the 1930s, political criticism was emerging, in the US and Europe, over the secretive machinations of these powerful “lords of finance.” This surge of criticism primarily came from politicians looking for a scapegoat upon which to blame the deteriorating economic conditions.

Bankers and financiers, the heroes of the previous decade, now became the whipping boys. No one provided a better target than Andrew Mellon.… Mellon found himself accused of corruption, of granting illegal tax refunds to companies in which he had an interest, of favoring his own banks and aluminum conglomerate in Treasury decisions.… During the ensuing investigations, it turned out that he had used Treasury tax experts to help him find ways to reduce his personal tax bill and that he had made liberal use of fictitious gifts as a tax-dodging device. Being a member of the Federal Reserve Board, he had been required to divest his holdings of bank stock, with which he had duly complied—except that he had transferred the stock to his brother (pp. 439–440)

The Senate Banking committee also learned,
... that Albert Wiggins, president of Chase, had sold the stock of his bank short at the height of the bubble and collected $4 million in profits when it collapsed during the crash; that Charles Mitchell, old “Sunshine Charlie,” of the National City Bank had lent $2.4 million to bank officers without any collateral to help them carry their stock after the crash, only 5 percent of which was repaid; that Mitchell himself, despite earning $1 million a year, had avoided all federal income tax by selling his bank stock to members of his family at a loss and then paying it back; that J.P. Morgan had not paid a cent of income taxes in the three years from 1929 to 1931. (pp. 440–441)

Modern Relevance
The names have changed but the modern-day lords of finance do their forebearers proud. Presidents continue to surround themselves with top Wall Street insiders. Some could argue that Goldman Sachs executives best understand our financial system and are a logical choice to advise these presidents and influence Federal Reserve policy. What is also clear is that these same bankers have deliberately maneuvered themselves into close proximity of the Fed and the Federal government in order to influence and benefit from its policies. Since the Fed’s creation in 1913, the top bankers have consistently maintained close relationships with the Fed.

Mainstream academic economics has long been dominated by economists close to the lords of finance. In the book Lords of Finance, Lord Keynes, himself an academic economist, is surrounded by and consorted with the most influential bankers and politicians of his era. He was even granted a position on the board of the Bank of England. In late 1929, the British government created a committee to investigate the highly criticized banking system, half of the 14 members were bankers and the other half were businessmen and inflationist economists such as Lord Keynes. In the 21st century, the lords continue to promote inflationist economists such as Paul Krugman and Larry Summers, who in turn promote their agenda of greater power for central banks, more bailouts, and continued interventionist policies that benefit the banks.

Mainstream economists today continuously place blame everywhere except on the inflationist policies of the central banks for the economic devastation wrought over the past 100 years. The megalomaniacs (p. 149) within and surrounding the central banks seldom admit to their mistakes, often because their decisions are politically driven, leaving them no choice but to inflate the currency. In the early 1920s, Von Havenstein (head of the Reichsbank), like Bernanke today, did not admit that his policies were inflationary. He blamed everyone but himself, and just before the hyperinflation set in ...
He began arguing that the inflation had nothing to do with him, that he was a passive bystander to the whole process, that his task was simply to make enough money available to grease the wheels of commerce, and if business was required a trillion more marks, then it was his job to make sure they were run off the presses and efficiently distributed around the country. (p 126)

Conclusion
Liaquat Ahamed is an excellent writer and deserves praise for giving this story light. The names were known but little else about the lives of these lords of finance, these men that have so affected our lives through their furtive manipulations. The story is all the more impressive because of the author’s high regard for the banking establishment and those who control it. Ahamed asserts that during our recent financial crisis (which was caused by the Federal Reserve’s artificially low interest rates), a catastrophe was averted. Perhaps he believes that ‘bank failures’ are a catastrophe. However, Austrian economists can demonstrate that bank failures are beneficial to an economy overall, as this helps to quickly facilitate the process of liquidating malinvestments.

Although Ahamed acknowledges that artificially low interest rates encouraged the bubble of the 1920s, he fails to recognize its central role. Although he acknowledges the secretive nature of our banking system and the way in which powerful bankers benefit from the system, he glosses over these facts as though they are indelible components of “capitalism,” not realizing that central banking is in fact antithetical to a free market system.

Ahamed notes that in 1923,
few people could be convinced to entrust the management of national moneys and currency values to the discretion of treasury mandarins, politicians, or central bankers. (p. 168)

Why is it then that so many people are willing to do just that today? I submit that if more citizens were aware of the power of central bankers and the destructive and corrupt nature of the system, the public would demand a change. The first step toward a real change is more widespread exposure of the system and its scandalous history. We therefore need more books like Lords of Finance.
Dan O'Connor spent almost 6 years in Asia, living in major cities. He speaks fluent Mandarin and a professional level of Cantonese. Before returning to the US, he worked for a free-market think tank in the world's freest economy, Hong Kong. He recently ended a campaign for U.S. Congress in representing NYC and his neighborhood of Chinatown. Visit his campaign website. Send him mail. See Dan O'Connor's article archives.

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Banqueiros centrais: a nova mafia (do MIT) que domina o mundo

Alguns diriam confraria, outros recorreriam ao termo mais conhecido de máfia. Não creio que seja bem isso, pois a verdadeira Máfia tem o dom da imovibilidade, ou seja, uma vez entrado na respeitável corporação, que tem as suas regras de honra, não tem mais saída. Os banqueiros centrais estão mais para mercenários, ou seja, podem trabalhar para exércitos estatais ou para milícias privadas, ou seja, bancos comerciais.
Se trata de uma corporação de ofício, mas mutável e cambiante, nem por isso menos secreta e adepta das teorias conspiratórias, para quem aprecia o gênero
Paulo Roberto de Almeida 
  

Inside the Risky Bets of the Central Banks

By JON HILSENRATH and BRIAN BLACKSTONE

The Wall Street Journal, December 12, 2012

BASEL, Switzerland—Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.

The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world's biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world's economic output.

Of late, these secret talks have focused on global economic troubles and the aggressive measures by central banks to manage their national economies. Since 2007, central banks have flooded the world financial system with more than $11 trillion. Faced with weak recoveries and Europe's churning economic problems, the effort has accelerated. The biggest central banks plan to pump billions more into government bonds, mortgages and business loans.

Their monetary strategy isn't found in standard textbooks. The central bankers are, in effect, conducting a high-stakes experiment, drawing in part on academic work by some of the men who studied and taught at the Massachusetts Institute of Technology in the 1970s and 1980s.

While many national governments, including the U.S., have failed to agree on fiscal policy—how best to balance tax revenues with spending during slow growth—the central bankers have forged their own path, independent of voters and politicians, bound by frequent conversations and relationships stretching back to university days.

If the central bankers are correct, they will help the world economy avoid prolonged stagnation and a repeat of central banking mistakes in the 1930s. If they are wrong, they could kindle inflation or sow the seeds of another financial crisis. Failure also could lead to new restrictions on the power and independence of central banks, tools deemed crucial in such emergencies as the 2008-2009 financial crisis.

"Will history decide they did too little or too much? We don't know because it is still a work in progress," said Kenneth Rogoff, an economics professor at Harvard and co-author of a book, "This Time Is Different," examining financial crises over eight centuries. "They are taking risks because it is an experimental strategy."

The U.S. Federal Reserve now buys $40 billion of mortgage-backed securities each month and appears set at a meeting Wednesday to spend billions more on Treasury securities. The Bank of England has agreed to funnel billions of pounds to businesses and households through banks. The European Central Bank pledged to hold down borrowing costs of governments that sought help. The Bank of Japan,8301.JA -4.03% under increased pressure to fight deflation, is purchasing ¥91 trillion yen ($1.14 trillion) in government bonds, corporate debt and stocks.

The goal is to lower borrowing costs and stimulate stock markets to encourage spending and investment by households and business. But the method is untested on such a global scale, and central bankers have labored in behind-the-scenes meetings this year to size up the risks.

A day after their June dinner here, the central bankers were warned by one of their hosts in a speech to the group.

"Central banks find themselves caught in the middle, forced to be the policy makers of last resort. They are providing monetary stimulus on a massive scale," said Jaime Caruana, general manager of the Bank for International Settlements, where the dinners are held. "These emergency measures could have undesirable effects if continued for too long."

Another worry: Boosting stock markets and easing credit costs allow national governments to postpone difficult political decisions to fix such problems as swelling budget deficits, according to this contrary view.

Vocal critics include economists at the BIS, an international body based here that is increasingly an important staging ground for talks about the postcrisis financial landscape. They say central banks, seeking faster growth, are stretched too thin.

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"Central banks cannot solve structural problems in the economy," said Stephen Cecchetti, who runs the BIS monetary department. "We've been saying this for years, and it's getting tiresome."

Central banks control the spigot of the world's money supply. When opened, the flow of new cash heats up economies, driving down interest rates and unemployment but risking inflation. Closing the spigot, on the other hand, raises interest rates and cools economies but tamps down prices.

The central bankers have promised that once the global economy gets back on its feet, they will shut off the spigots quickly enough to forestall inflation. But pulling back so much money, at exactly the right time, could become a political and logistical challenge.

"We're all very conscious that we're in an environment that's unusual and we're using a policy weapon that we don't have a lot of experience with," Charles Bean, deputy governor of the Bank of England said in an interview.

Central bankers themselves are among the most isolated people in government. If they confer too closely with private bankers, they risk unsettling markets or giving traders an unfair advantage. And to maintain their independence, they try to keep politicians at a distance.

Since the financial crisis erupted in late 2007, they have relied on each other for counsel. Together, they helped arrest the downward spiral of the world economy, pushing down interest rates to historic lows while pumping trillions of dollars, euros, pounds and yen into ailing banks and markets.

Three of the world's most powerful central bankers launched their careers in a building known as "E52," home to the MIT economics department. Fed ChairmanBen Bernanke and ECB President Mario Draghi earned their Ph.D.s there in the late 1970s. Bank of England Governor Mervyn King taught briefly there in the 1980s, sharing an office with Mr. Bernanke.

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• MIT Forged Activist Views, Ties of Central Bankers

Many economists emerged from MIT with a belief that government could help to smooth out economic downturns. Central banks play a particularly important role in this view, not only by setting interest rates but also by influencing public expectations through carefully worded statements.

While at MIT, the central bankers dreamed up mathematical models and discussed their ideas in seminar rooms and at cheap food joints in a rundown Boston-area neighborhood on the Charles River.

Over Sunday dinners in Basel, which often stretch to three hours, they now talk of pressing, real-world problems with authority. The meals are part of two-day meetings held six times a year at the BIS. Dinner guests include leaders of the Fed, ECB, Bank of England and Bank of Japan, as well as central bankers from India, China, Mexico, Brazil and a few other countries.

"That is where it really gets down and dirty," said Nathan Sheets, a CitigroupC -0.51% economist and former head of the Federal Reserve's international affairs division. He didn't attend the dinners during his tenure at the Fed but is familiar with them. "Every one of the dinners was important through the crisis."

The Bank of England's Mr. King leads the dinner discussions in a room decorated by the Swiss architectural firm Herzog & de Meuron, which designed the "Bird's Nest" stadium for the Beijing Olympics. The men have designated seats at a round table in a dining area scented by white orchids and framed by white walls, a black ceiling and panoramic views.

"It is a way in which people can talk completely privately," Mr. King said in an interview. "It is a big advantage if you have some feel for how central banks think about questions, what they're likely to do in the future if certain events were to occur."

Serious matters follow appetizers, wine and small talk, according to people familiar with the dinners. Mr. King typically asks his colleagues to talk about the outlook in their respective countries. Others ask follow-up questions. The gatherings yield no transcripts or minutes. No staff is allowed.

The 18-member group, formally known as the Economic Consultative Committee, has only once issued a public statement: a two-line missive in September, promising to look for solutions in interbank lending markets, responding to allegations that some private banks had conspired to manipulate the Libor interest rate.

On Mondays after the dinner, the bankers join a larger group of central bankers at a large round table on a lower floor of the BIS building, which is shaped like a rook chess piece. Staff members sit nearby at desks decorated in white leather.

"These meetings are a very important forum to understand the global situation," said Duvvuri Subbarao, governor of the Reserve Bank of India and a Sunday dinner participant. "People speak freely."

The central bankers often act with the common goal of bringing the world closer to full employment. Other times, though, they are starkly at odds.

In November 2010, for example, the Fed launched a $600 billion bond-buying program known as quantitative easing. A few days later, New York Fed PresidentWilliam Dudley and Fed vice chairwoman Janet Yellen attended a weekend meeting here and were surprised by the furor the Fed's stimulus program had stirred among developing countries, according to people familiar with the talks. Mr. Dudley and Ms. Yellen spent much of the meeting explaining the Fed's actions, as other central bankers raised worries the program would cause inflation or spark an unwanted flood of capital into their markets.

"Every time there is quantitative easing by the Fed, that gets discussed," said Mr. Subbarao. "We all have to reckon with the spillover impact of our policies on other countries." Basel, he said, is the place to air such concerns.

The role of the Bank for International Settlements has broadened since it was formed in 1930 to handle reparation payments imposed on Germany after World War I. In the 1970s, it became the center of discussions on bank capital rules. In the 1990s, it became the meeting place for central bankers to talk about the global economy.

The central bankers typically stop short of formally coordinating their moves. Mr. Bernanke, Mr. Draghi and Bank of Japan head Masaaki Shirakawa are more focused on domestic challenges. Mr. Shirakawa has often warned others in Basel about the effectiveness of easy money policies, according to people familiar with his statements. That hesitance has made the BOJ an issue in Sunday's Japan elections. Shinzo Abe, the front-runner to become prime minister, has promised to rein in the BOJ's independence and demand more aggressive efforts to end consumer price deflation.

But as central bankers grapple with doubts and disagreements over reviving the global economy, they form a tightknit fraternity, tied by efforts to manage growth and gird against financial instability. Their relationships play out during conversations by phone and in person.

"A big secret of central bank cooperation," Mr. King said, "is that you can just pick up a phone and have an agreement on something very quickly" in a crisis.

This summer, the central banking clique kept in close touch as they readied for a new round of monetary activism. On June 8, Mr. Bernanke and Mr. King spoke by phone for a half-hour before policy meetings at their central banks, according to Mr. Bernanke's phone records, obtained in a public records request. A few days later, Mr. Bernanke spoke by phone with Mark Carney, head of the Bank of Canada—and last month named as Mr. King's successor. Shortly after, Mr. Bernanke called Stanley Fischer, head of the Bank of Israel, and a former MIT professor who was Mr. Bernanke's dissertation adviser.

On June 18, Mr. Bernanke had an early morning call from his home on Capitol Hill with Mr. Draghi and Mr. King, according to his phone records, as the men assessed the impact of the Greek election on Europe's financial system.

Two conflicting views tug at the world's central bankers. One view is that central banks haven't done enough to attack economic malaise. The other is that easy-money policies lack sufficient power to help economies and risk triggering runaway inflation or another financial bubble.

In August, tension over the two positions spilled into the open during the Fed's annual retreat in Jackson Hole, Wyo. Adam Posen, who recently finished a four-year term as a member of the Bank of England's monetary policy committee, chastised central bankers for their unwillingness to do more to stimulate their economies because of "self-imposed taboos."

Mr. Posen said central banks should give more help to such weakened markets as U.S. mortgages and European government bonds.

Athanasios Orphanides, another MIT professor who recently finished a term as the head of the central bank of Cyprus, took the opposing view. In the 1970s, he said, central banks sought to return unemployment to low levels of the 1960s. They made the mistake of keeping interest rates too low for too long, he said, yielding inflation instead of full employment. If banks repeat the mistake of overestimating their ability to push unemployment lower, he said, "disaster will follow on the price front."

Mr. Bean, meanwhile, said he worried that current low-interest-rate policies were losing their efficacy, an idea recently echoed by Mr. King. Low rates, he said, might induce less-than-expected business and consumer spending when governments and the private sector are burdened by too much debt.

"There is a lot we don't understand," said Donald Kohn, the Fed's former vice chairman.

Mr. Bernanke sat quietly during the discussion. But he and the other major central bankers were already primed to launch a new monetary onslaught.

A few days later, the ECB announced an agreement to buy bonds of struggling European governments in exchange for a country's adherence to fiscal austerity.

Then the Fed announced plans to buy bonds every month until U.S. job market improves "substantially." The BOJ, despite Mr. Shirakawa's hesitance, soon followed with news it also was expanding its bond-buying program.

Economists at the BIS, meanwhile, have grown more skeptical about the central bank tilt. They say their warnings of a credit bubble were ignored before the financial crisis. "Nobody took it seriously," said William White, formerly the top BIS economist.

Now, he said, the central banks may again be steering toward long-term troubles in their elusive quest for short-term growth.

Write to Jon Hilsenrath at jon.hilsenrath@wsj.com and Brian Blackstone atbrian.blackstone@dowjones.com

A version of this article appeared December 12, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Inside the Risky Bets of Central Banks.