Alan Greenspan explains “Fed-speak” and the art of constructive ambiguity
Have you ever listened to the public words of a government official and wondered just what the hell it is that he or she is trying to say? Or rather, not to say? Have you ever suspected that government figures deliberately speak in opaque and confusing terms, the better to “say something” without really saying anything, so that they can give the appearance of communicating to the public while actually withholding and concealing anything of real substance?
Now you need wonder and suspect no more, because Alan Greenspan has laid it all on the line. In a recent interview with Businessweek, Greenspan explains the origin of “Fed-speak,” his famous (notorious) method of speaking like an ersatz Zen master issuing impenetrable but profound-sounding riddles. It’s not that he hasn’t talked about such things before, but that he explains it here, so baldly and concisely, in one of America’s most popular business publications, that makes the whole thing a needle-scratching “Say what?” of a moment.
Of equal interest is his casual assertion that current Fed chairman Ben Bernanke is also a master of Fed-speak. And while one can sympathize with Greenspan’s expressed motivation for practicing this fusion of Orwellian Newspeak with James Joycean dream language, one also can’t help noticing that a particularly nasty cat is now running free from a fetid bag, and is yowling its way through the halls of media and down the corridors of power.
When you were Fed chairman, people talked about your inscrutability. You talk in your book about practicing the art of constructive ambiguity. What does that mean?
As Fed chairman, every time I expressed a view, I added or subtracted 10 basis points from the credit market. That was not helpful. But I nonetheless had to testify before Congress. On questions that were too market-sensitive to answer, “no comment” was indeed an answer. And so you construct what we used to call Fed-speak. I would hypothetically think of a little plate in front of my eyes, which was the Washington Post, the following morning’s headline, and I would catch myself in the middle of a sentence. Then, instead of just stopping, I would continue on resolving the sentence in some obscure way which made it incomprehensible. But nobody was quite sure I wasn’t saying something profound when I wasn’t. And that became the so-called Fed-speak which I became an expert on over the years. It’s a self-protection mechanism … when you’re in an environment where people are shooting questions at you, and you’ve got to be very careful about the nuances of what you’re going to say and what you don’t say.
Would you agree we’re in a liquidity trap now?
I can’t discuss that. I could, but I’m not.
I mean, there are limits to how far monetary policy can work in a case like this, right?
I’ll put it this way: Ben Bernanke has a far more difficult job than I had. He’s a very competent, experienced economist.
Do you ever talk to him?
Of course. We are both fluent in Fed-speak.
— Devin Leonard and Peter Coy, “Alan Greenspan on His Fed Legacy and the Economy,” Businessweek, August 9, 2012
The takeaway for all of in the United States would seem to be: don’t believe anything you hear, and not just when a Fed chairman speaks to Congress — where absolute truth and forthcomingness are ostensibly required and practiced — but whenever a government figure speaks before the public. In a culture where perception management has become our national purpose — via “public relations” (see: propaganda), press releases, social media profiles, and more — truth is hard to come by, and it certainly won’t come from “official” channels (whereas Greenspan, in his now non-official status, is free to speak his mind).