An Interview with a Central Banker: 'To Infinity and Beyond'
Dear reader, I recently conducted the most important interview of my nascent journalistic career. The information I uncovered in my interview will, I suspect rival Woodward and Bernstein's Watergate revelations. My interview with Gustavo Laframbroise-Pierre, newly promoted Director of Statistical Creation, at the European Central Bank [ECB] will surely earn me a Pulitzer Prize. I will share the information I gleaned in this interview. I caution you, dear reader that the topics discussed in the interview will challenge the very core of your understanding of economics and the role of government. As well, it will clarify in your mind, the likely resolution to the world's debt crisis.
Le Verre Volé (The Stolen Glass)
My access to a personal interview from the usually reticent Mr. Laframboise-Pierre was the happy result of my recent trip to Paris combined with Mr. Laframboise-Pierre's legendary affinity for French wine. Oh, and did I mention that Mr. Laframboise had been my bookie until a bad bet by a senior member of the ECB left my former bookie in the curious position of accepting a high paying job at the ECB to settle the debt. As soon as I arrived in Paris I looked him up. He suggested we meet at his favorite wine bar, Le Verre Volé (The Stolen Glass) near the Quai de Valmy.
What is Statistical Creationism
As we sipped our wine, [Domaine Jolly Ferriol - Chai Moi, a nice mix of syrah, Grenache, and carignan that is always ready to drink] I took out my notepad, and steeled myself to ask Gustavo the really tough questions that needed answers. I started the interview by asking Gustavo to explain what exactly a 'Director of Statistical Creation' did? With great pride Gustavo indicated that unlike statistical analysis and regression analysis, Statistical Creationism was the process of, first determining a conclusion and then creating statistics that support the conclusion. Statistical Creationism has three important components, volume, velocity and variance. I must have looked puzzled because he went on to say, "Let us assume that a Central Bank wants to prove that their actions are not devaluing their currency. My job is to circulate a blizzard of created statistics that make the issue seem hopelessly complex. That is the volume. Furthermore I need to circulate the statistics through the media, the analyst and economic community, and of course the general public. That is the velocity. The next step is to change some of the numbers and re-circulate the numbers so that any meaningful discourse becomes mired in series of conflicting comparisons that make thoughtful analysis and discussion almost impossible. That is the Variance. It is quite straightforward, Volume Velocity and Variance. Finally I need to ensure that the numbers are released at an ever increasing speed to amplify the volume of the discussion to the point where the confused conflicting and contradictory discussion of the issue and statistics leaves the general public covering their ears as the white noise of the discussion becomes so loud the human brain can no longer process the information.
Volume Velocity and Variance
Amplification of any or all of the velocity, variance and volume of statistics helps to ensure successful obfuscation of any message. At that point the general public will accept what they are told based on the color of the tie or scarf worn by the ECB member who is presenting the information."
Garcon, more wine please
I took a sip of my wine. [Truthfully I also reached into my pocket and pulled out my flask. I drained the flask its contents, Jack Daniels, of course.] Gustavo was making me very nervous. "Not to put too fine a point on this Gustavo but isn't what you are doing disingenuous at best or lying at worst." "You are very unfair and naive David" Gustavo responded, "Statistical Creationism was first discovered on Wall Street in the mid 80's as analysts evolved from being research technicians to rock stars. Over the last 20 years it has been, refined and adopted by Central banks, politicians and corporations. Just listen to the discussion taking place in the American election. Every debate or speech includes statistics that are released in high volumes with periodic variation and with an astounding velocity. Despite two years of discussion the public has no understanding how either party will spend or save money over the next four years. The next president will be elected based on the easier to understand issues of likeability, snappy non sequitur sound bites and the color of their tie.
My journalistic DNA made me realize that I was on the verge of breaking the 'Story of the Century' The headline would be 'Statistics Manipulated to Medicate the Public'. Gustavo must have read my mind, he flipped his lap top around and showed me a chart of the Debtors' Merry-go-Round "David, these numbers are relatively accurate and might alarm people. Fortunately my department has created enough statistics on this topic, to ensure that the issue will be relegated to the recycle bin of the public's mind." At this point I started to drink directly from the bottle of wine on our table. Gustavo, "Why are you doing this? Why can't you be honest with the public?" He looked at me as if I was insane. "If we did that people would panic, they would stop buying things, they would throw their politicians out of office, there would be anarchy. Our strategy is to medicate the public, print money, expand debt and most importantly, pray for a miracle at some point in the not too distant future to solve the crisis. We feel, this is a much more responsible course of action."
We are not Stupid
He sipped his wine and continued "Politicians are not stupid. As Jean Claude Juncker famously said, "We all know what to do, we just don't know how to get re-elected after we've done it." .
We are on a Mission from God
Gustavo opined, "We at the ECB, feel that, like the Blues Brothers, we are on a 'a Mission from God' to save the world." My mind flashed back to the carnage the Blues Brothers left in their wake as they completed their 'Mission from God'.
You make it sound so Nefarious
I reviewed my notes and said, "So if I understand correctly Gustavo the strategy of the world's Central Bankers and politicians is to effectively apply a powerful sedative to the general public using a baffling array of created statistics, money printing, perpetual debt and doublespeak to ensure that citizens do not start a revolution. At the same time the central bankers and politicians will collectively pray for a miracle. Have I got that right Gustavo?" Gustavo sighed and said, "Well you make it sound so nefarious, but yes that is the essence of the plan to end the debt crisis."
Would you like to create 30 billion Euros?
I was sweating profusely at this point as it dawned on my simple mind that we were @#%@&^%. Gustavo must have sensed my unease. He smiled to reassure me and said. "Don't worry David we have an unlimited supply of medication. While we wait for the miracle we can postpone the crisis for years". Let me show you. He typed on his computer for a couple of minutes and then turned the laptop to me again. "Would you like to create 30 billion Euros? I am online with headquarters, all you need to do is key in the amount and hit enter". Skeptical but excited I typed in 30 billion Euros and pressed enter, magically 30 billion Euros appeared on the ECB's balance sheet. "Now David, to who would you like to give the money to?" "Don't you mean lend the money, Gustavo?" I suggested. "Sure David if that makes you happy" he responded, "just use the drop down menu and select a destination. The alternatives are already preprogrammed. Your choices are European banks, European countries, the IMF, The Federal Reserve, the ECB payroll department and my Swiss bank account, just kidding David", he laughed, "We don't really send money to the Federal Reserve." I chose European banks and pressed send. You could almost feel the soothing euphoria as the medication entered the veins of the European financial system. "How do I know which banks I sent the money to Gustavo?" He shook his head, "You ask too many questions David. As we do not expect to ever see that money again we do not need to keep track of it". If Adam Smith were alive today he certainly would have to add a few chapters to the Wealth of Nations to explain modern economics.
The one Exit Strategy Central Bankers have mastered
Gustavo was anxiously checking his Smartphone and texting furiously. Clearly he was losing interest in our conversation. Undoubtedly he was already planning his 'exit strategy' so that I would be left with the bill for our wine. [This is probably the only 'exit strategy' that all central bankers have mastered]
David he said, "I need to prepare for the EU's next summit October 18th. It should be a great party. They will have a karaoke machine, jugglers and a magician.
Que Sera Sera
"Say What", Gustavo I pleaded, "I thought the purpose of these summits was to brainstorm on solutions to Economic and Debt Crisis." Gustavo looked at me impatiently, "David we having been having these summits every 5 weeks for two years now. At the end of each summit we announce that we will print more money, lend more money and borrow more money. Don't you think we would have proposed an alternative solution by now if we could think of one? It is very stressful. Karaoke helps everyone relax. You should see Angela Merkel's rendition of Que Sera Sera "
To infinity and beyond
As our interview came to an end I noticed Gustavo looking out the window and staring at the stars. "A penny for your thoughts Gustavo" I muttered, as I stared at the 120 Euro tab he was going to stick me with. David he whispered "never forget that we are on a Mission from God. We will travel to infinity and beyond to protect the euro and save the world." He then winked and said, "unless of course our strategy proves to be the wrong strategy, in which case Europe will once again become a collection of individual countries who, for better or for worse, will each control their own destiny and, more importantly, I will be out of a job."
The Subprime Crisis will be contained
My confidence level was somewhere below zero. I could not help remembering another Central Bankers reassuring words, indicating that the subprime crisis would be contained .
Reality is a difficult place. We should all live in the alternate reality that Central Bankers have discovered.