Despite the promise of increased transparency, if you felt that deciphering Fed policy (other than uber-dovish, lower-for-longer, willing-to-wait, BTFD) became more and more confusing as the last few years progressed, you would not be alone. In fact, the complexity of the Fed's statements (not just the wordcount which we have noted numerous times) has surged from "Secondary School" reading level throughout Greenspan's era to "Post-Grad" comprehension at the peak of Bernanke's reign. Yellen, so far, has reverted modestly. As The Economist notes, [9] this increased baffle-em-with-bullshit "Fedspeak" complexity is very reminiscent of the George Orwell's 1984-esque "oldspeak" or "doublespeak" used to keep a quiescent public bemused.
As The Economist notes, [9] in George Orwell’s "1984", there was "oldspeak", "duckspeak", "doublespeak" and "newspeak". In modern central banking, there is "Fedspeak". One of the Federal Reserve’s principal means of communicating its views on monetary policy is to issue a press statement after its regular Federal Open Market Committee (FOMC) policy meetings. These statements have become longer and more complex, according to a recent report by Rubén Hernández-Murillo and Hannah Shell of the Federal Reserve Bank of St Louis, perhaps contradicting their original purpose.
[10]
A noticeable uptick in the complexity of the FOMC statements occurred shortly after the Fed announced the start of quantitative easing in late 2008. As its balance-sheet ballooned, so too did the length of its press statements. Twice during this period the Flesch-Kincaid reading level reached 20, suggesting that Fed-watchers would need four years of postgraduate education just to parse what was going on—an onerous hurdle for a press statement that is meant to inform the public. (No such pattern is discernible for the European Central Bank, whose press statements have maintained a consistent undergraduate reading level of around 14 over the past decade.)
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So there it is... baffle em with bullshit writ large.
