Fed Speak

“What? What did you just say? It sounded like a whole lot of something without actually saying anything...like Fed speak!” Remember Newspeak in 1984?

Fed speak is a term that refers to saying a lot of words without actually communicating a clear or coherent message. The listener is getting a lot of words to parse, but ends up with little take-away as far as actual thoughts go. Fed speak became a thing after many years of the Fed’s Chairman, Alan Greenspan, danced his wordy dance, ambiguously saying and not-saying things.

While Fed speak might seem annoying or deflective (like when politicians “answer” questions without answering them at all), many economists and analysts agree that ol’ Al may have had some justification in being so ambiguous.

You see, the Fed is in the business of managing expectations to manage the economy. So much of the economy depends on whether people feel spend-happy or fearful and save-ful, which includes what the Fed is up to. By saying things (and not really saying things) tall Al was probably trying to avoid jerky market motions that would inevitably follow any big “hey world, this is what the Fed is doing right now…” public remarks.

Since Greenspan’s 20-year Chair career from 1986 to 2006, Fed Chairs have done the opposite, giving clear “giveaway” statements in as few words as possible...which, inevitably, affect markets directly. You can bet all those algorithms, Wall Streeters, and the world at large are keeping their ears perked for those snappy, market-jolting, future-telling Fed Chair statements. Sorry, Al.