Alan Greenspan is doing the unthinkable these days: Speaking English. The Federal Reserve chairman is speaking something approaching plain, simple English.
For longtime Fed watchers, Greenspan's increased use of the same language as the rest of us is both refreshing and unsettling.
After all, Greenspan has raised verbal obfuscation to an art form.
Like an ancient philosopher, the 75-year-old economist can wax on and on about one issue or another without saying a coherent thing.
A small army of economists and journalists came together over the years to decode the US central bank's interest rate policies.
"Since I've become a central banker I've learned to mumble with great incoherence," Greenspan joked in 1995.
Now, with Greenspan and his colleagues telling us what they really think and spelling out what they're doing with interest rates, this expertise has been diminished. Times were when the winks, nods and secret handshakes involved in explaining Greenspan's words to the masses required experts. Wall Street firms hired loads of then, even making stars out of some. Fed watchers' faces graced television screens and magazine covers.
Folks have even written books in recent years to translate Greenspeak. There's The Greenspan effect: Words that move the world's markets. There's The quotations of Chairman Greenspan: Words from the man who can shake the world or The Greenspan Variations: What we talk about when we talk about Alan. And then there's my personal favorite title: The poetry of Alan Greenspan: Recorded rather painstakingly, but nevertheless with adequate regard for the author's central thrust. Unfortunately, such books might have had a better run three yeas ago when Alan "What the heck did he just say?" Greenspan was still engaged in verbal gymnastics. A guide to Greenspeak is far less necessary now that the veil of secrecy that used to hover over Fed headquarters has been yanked way.
Not only has Greenspan simplified his delivery and begun employing straightforward language. The Fed has gone out of its way to open up its doors to a curious public.
While it still has a ways to go, the Fed's been demystify its role in the economy for years. It's first big step in that direction came in 1994, when the Federal Open Market Committee (FOMC) began announcing its interest rate changes, rather than having monetary economists decipher things. The FOMC started putting out press releases explaining its decisions and even giving markets hints about where borrowing costs might be headed next. In the past, markets had to wait six weeks to find out which way the Fed was leaning.
Policy makers also headed out on the speaking circuit, chatting more about interest rate decisions than in the past and even defending their moves. More and more, Greenspan has put aside the circumlocution he's exercised so artfully and begun spelling out his views.
The result is the slow, yet unmistakable, death of Fed watching. The Greenspanology that economists used to study and practice is gradually becoming a dead discipline. It may just be the economics profession's answer to Latin. The reason has as much to do with the Fed's efforts to become more transparent as it does with Greenspan's rapidly growing -- and diversifying -- audience.
With fiscal policy locked in place for much of the last decade, the Fed is firmly in the drivers seat, steering the economy up and down with short-term interest rates. The central bank's growing influence coincided with a "main-streeting" of US asset markets.
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