Known as Fed Speak, the convoluted rhetoric has befuddled even the wisest of interpreters.

— Wealth Building Strategies in Energy, Metals and Other Markets

In monetary policy of the United States, the term Fedspeak (also known as Greenspeak) is what Alan Blinder

Alan Blinder

Alan Stuart Blinder is an American economist. He serves at Princeton University as the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs in the Economics Department, Vice Chairman of The Observatory Group, and as co-director of Princeton’s Center for Economic Policy Studies,...

 called "a turgid dialect of English" used by Federal Reserve Board chairmen in making intentionally wordy, vague, and ambiguous statements. The strategy, which was used most prominently by Alan Greenspan

Alan Greenspan

Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

, was used to prevent financial markets from overreacting to the chairman's remarks. The coinage is an intentional parallel to Newspeak

Newspeak

Newspeak is a fictional language in George Orwell's novel Nineteen Eighty-Four. In the novel, it refers to the deliberately impoverished language promoted by the state. Orwell included an essay about it in the form of an appendix in which the basic principles of the language are explained...

 of Nineteen Eighty-Four

Nineteen Eighty-Four

Nineteen Eighty-Four by George Orwell is a dystopian novel about Oceania, a society ruled by the oligarchical dictatorship of the Party...

, a novel by George Orwell

George Orwell

Eric Arthur Blair , better known by his pen name George Orwell, was an English author and journalist...

.

The deliberately confusing and carefully rehearsed cryptic language described as an "indecipherable, Delphic dialect" is meant to "give people a sense that there's no way they could understand economics and finance" and thus allow the Federal Reserve and government to manage the economy with less interference from the general public.

Although Ben Bernanke

Ben Bernanke

Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....

 has stated that Fedspeak now means clear and extensive communication of the fed's action, the original interpretation in which Fedspeak meant "explaining more, is understanding better" is still prominently used. It should also be noted that Bernanke's speech has also been described as fedspeak.

It has been noted that the nuanced nature of fedspeak poses interpretation problems to automated trading algorithms.

Origin

The notion of fed speak originated from the fact that financial markets placed a heavy value on the statements made by Federal Reserve governors, which could in turn lead to a self-fulfilling prophecy

Self-fulfilling prophecy

A self-fulfilling prophecy is a prediction that directly or indirectly causes itself to become true, by the very terms of the prophecy itself, due to positive feedback between belief and behavior. Although examples of such prophecies can be found in literature as far back as ancient Greece and...

. To prevent this, the governors developed a language, termed fedspeak, in which ambiguous and cautious statements were made to purposefully obscure and detract meaning from the statement.

Though previous "Fed" chairmen Arthur Burns and Paul Volcker

Paul Volcker

Paul Adolph Volcker, Jr. is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan from August 1979 to August 1987. He is widely credited with ending the high levels of inflation seen in the United States in the 1970s and...

 were known for blowing smoke, both literally and figuratively, when appearing before Congress, Alan Greenspan is credited with making Fedspeak a "high-art".

Usage by Alan Greenspan

He used to take pride in the resulting obfuscation—even characterizing his own way of communicating as 'mumbling with great incoherence.' In a famous incident, he once told a US senator, who claimed to have understood what the famously obscurantist chairman had just said, that 'in that case, I must have mispoken.'

— How do central banks talk?

Although it was originally believed by some that Alan Greenspan

Alan Greenspan

Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

, who is generally credited for popularizing fedspeak, may have used such language unintentionally, he revealed in his 2007 book The Age of Turbulence

The Age of Turbulence

The Age of Turbulence: Adventures in a New World is a 2007 memoir written by former Chairman of the Federal Reserve Alan Greenspan. Published on September 17, 2007, the book debuted at the top of the New York Times Best Seller list for hardcover nonfiction.-Overview:The first half of The Age of...

, that the method of avoiding the issues directly when a clear message was not desired was indeed intentional. Greenspan states that the confusion, which often resulted in conflicting interpretations, was used to prevent unintended jolts to the markets as confusing statements were typically ignored.

He noted that he came upon the dialect while at the fed: "What I've learned at the Federal Reserve is a new language which is called 'Fed-speak.' You soon learn to mumble with great incoherence."

When asked later to describe Fedspeak, Greenspan described it as:

...a language of purposeful obfuscation to avoid certain questions coming up, which you know you can't answer, and saying--"I will not answer or basically no comment is, in fact, an answer." So, you end up with when, say, a congressman asks you a question, and don't wanna say, "No comment," or "I won't answer," or something like that. So, I proceed with four or five sentences which get increasingly obscure. The congressman thinks I answered the question and goes onto the next one.

stating that "I would engage in some form of syntax destruction which sounded as though I were answering the question, but in fact, had not."

Greenspan is noted for saying "I know that you think you know what I said. But I'm not sure whether you understood that what you heard is what I meant."

Examples

The Fed has a language all its own, and unfortunately, the folks over at Rosetta Stone have yet to create a program to help laypeople understand what the hell the fed is talking about.

— Ron Insana Ron Insana Ron Insana is a reporter for Market Score Board Report with Ron Insana, syndicated by Compass, and a former Senior Analyst at CNBC. He was Managing Director of Insana Capital Partners from inception to collapse. He was the anchor of CNBC's "Street Signs", which aired weekdays during stock market...

As of 2011, the Federal Reserve Bank of Dallas

Federal Reserve Bank of Dallas

The Federal Reserve Bank of Dallas covers the Eleventh Federal Reserve District, which includes Texas, northern Louisiana and southern New Mexico....

 website still maintains a "Greenspeak" page with dozens of excerpts from Greenspan's past statements as head of the Federal Reserve Bank. Each quotation has a pointer to its full context in his speech, and is posted without commentary or interpretation.

Commentary

The University of Virginia Writing Program Instructor Site offers some selected quotations from Greenspan, with a suggestion that students be given writing exercise assignments of clarifying their expression of ideas.

A public relations

Public relations

Public relations is the actions of a corporation, store, government, individual, etc., in promoting goodwill between itself and the public, the community, employees, customers, etc....

 firm cites an example of "Greenspeak" as the statement of one of the "master practioners of creative ambiguity over the years". The brief essay mentions two other master practitioners of obfuscation, Hubert H. Humphrey and Casey Stengel

Casey Stengel

Charles Dillon "Casey" Stengel , nicknamed "The Old Perfessor", was an American Major League Baseball outfielder and manager. He was elected to the Baseball Hall of Fame in ....

. The overall tone of the essay is one of awed admiration for a sometimes-necessary skill in obscurantism. In closing, the writer notes that, "As professional performers say, to deliberately sing off-key requires a highly skilled singer."

See also

• Index of public relations-related articles
• Security through obfuscation
• Technobabble
  Technobabble
  Technobabble , also called technospeak, is a form of prose using jargon, buzzwords, esoteric language, specialized technical terms, or technical slang that is incomprehensible to the listener...
  
  

External links

• Fedspeak, Remarks by Governor Ben S. Bernanke