Your Psychiatrist Will See You Now, Mr. Central BankerBy
Global Central Bank (GCB) checks the hallway for pesky reporters, sees none, and slips into the finely furnished office of Dr. Honoris Causa (DHC), noted psychiatrist to the troubled rich and famous.
Global Central Bank: Thanks for seeing me, Doctor. Frankly, I’m not sure why I’m here. I should be jumping for joy. For the first time in years, everything is in sync. Growth is up everywhere. But I can’t stop feeling anxious. Ever since I was a little boy growing up in Chicago, it was drummed into me that the one thing I was really good for was controlling inflation. It’s always and everywhere a monetary phenomenon, as Uncle Milton never tired of telling me. But no matter what I do, I just can’t seem to get it up. I’ve even gone a bit unconventional and bought buckets of bonds. But all that’s done is end up tying my balance sheet in knots and leaving my hair with more shades of gray. Inflation is still soft.
Dr. Honoris Causa: That doesn’t sound good.
GCB: It’s even worse than that. Nobody thinks I can get prices up. I’m depressed. Inflation expectations are depressed. It’s a vicious cycle.
DHC: Did you try opening up and talking about it more?
GCB: Talking about it more? I give hundreds of speeches a year, everywhere from the Rotary Club in Cleveland to Chatham House in London. It just seems to end up confusing everybody, including myself.
DHC: What do your colleagues say you should do?
GCB: Some say I should stop obsessing, adopt a target range for inflation say, 1 percent to 2 percent—declare victory, and let Jeff Bezos have his way. I’m not so sure about that. Others say I should double down and raise the target. Jeez, I can’t even hit the one I’ve got. Then there are the pointy heads who want me to adopt a price-level target—or even worse, a nominal GDP target. Yeah, just try explaining that to Representative Maxine Waters. Sometimes, I just want to chuck it all and go back to academia, where everything is so P.C.
DHC: Politically correct?
GCB: No, no. Phillips curve. You know, you push unemployment down, wages start to rise, and—voila!—inflation goes up. If only it was so easy.
DHC: Is that what’s really bothering you?
GCB: (Breaks down and starts crying.) Nobody loves me anymore! I used to be the maestro. They’d ask my opinion on everything from oil drilling to capital gains. Now the Republicans hate me. The Germans hate me. Even the Japanese, who are willing to put up with almost anything, got up in arms when interest rates went negative. Everybody seems to be Fed up. There’s even talk of taking away my cherished independence. And I dread an early morning tweet exposing me as a fake. Don’t they realize I saved the world from another Great Depression? Do they think that was easy?
DHC: I’m sure it will get better.
GCB: Get better? It’s only going to get worse. The next recession comes, and they’re all going to realize I’m just one big fat zero.
GCB: Yeah, you know, the zero lower bound. I’ve got this tool, and it’s useless. Short-term interest rates can’t go much below zero. And everybody is going to know it. I could go cutesy and do some more QE. But then they’d just blame me for distorting financial markets and worsening income inequality. I just can’t win.
DHC: Why do you insist on taking everything on yourself? Isn’t there somebody who could help you?
GCB: Who? My brother, FSB [Fiscal Stimulus Brigade]? He’s too busy getting his jollies cutting taxes. Great timing, that. Look, I’m not asking for much. All I want is for things to get back to normal, to get back to what they used to be before Larry Summers started yapping about secular stagnation. Sometimes I wish he’d just shut up.
DHC: Well, somebody loves you. The stock market is exuberant. I should know. I just sold some Facebook shares and bought my third Porsche.
GCB: Yeah, yeah, you’re all alpha dogs as long as I’m pouring in liquidity. Wait until you see what happens when I start taking it away.
DHC: Wait a minute. You’re not thinking of doing that, are you? I’ve got my eye on this Aston Martin.
GCB: Well, you know, the party seems to be getting a bit out of hand. Maybe it’s time to take away the punch bowl.
DHC: Get out, get out of my office! What’s the matter with you? Just because you’re all boo-hoo-hoo doesn’t mean that other people can’t be happy. No wonder they call economics the dismal science. Maybe we should let a lawyer run the central bank.
As GCB slinks out of DHC’s office, he suffers one more indignity: The good doctor’s assistant asks him to pay for the session in bitcoin. Then GCB spots someone in the anteroom he used to kibitz with but now steers clear of. It’s just another sad sack nobody loves anymore, seeking DHC’s help: Macro Hedge Fund.
Miller covers the Federal Reserve for Bloomberg News in Washington.