A Sinchi Translation of Bernanke's Speech
For anyone who might remain somewhat mystified by the peculiar language employed by central bankers, I offer this concise and user-friendly translation of Bernanke's recent speech delivered Friday in Jackson Hole, Wyoming.
Decode Bernanke's Pivotal Message to Financial Markets
Bernanke: Incoming data on the labor market have remained disappointing. Private-sector employment has grown only sluggishly, the small decline in the unemployment rate is attributable more to reduced labor force participation than to job creation, and initial claims for unemployment insurance remain high. Firms are reluctant to add permanent employees, citing slow growth of sales and elevated economic and regulatory uncertainty.
Translation: Who am I kidding? Of course I will print more dollars and try to absorb waning Chinese demand for U.S. Treasuries. For some protection, you may wish to consider some investment in growing gold producers like Goldcorp (NYSE: GG), Eldorado Gold (NYSE: EGO), or a budding silver miner like Endeavour Silver (AMEX: EXK) .
Bernanke: One risk of further balance sheet expansion arises from the fact that, lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings on financial conditions.
Translation: We don't really know how to operate our biggest remaining tool (the instructions are written in Chinese), and we'll be lucky if it doesn't chop off our leg.
Bernanke: [T]he statement currently reflects the FOMC's anticipation that exceptionally low rates will be warranted "for an extended period," contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language in the statement to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period than is currently priced in markets.
Translation: And if accelerated quantitative easing doesn't do the trick, we always have words. Oh yeah ... words. Shazam! Abracadabra!
Bernanke: Although what I have just described is, I believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments.
Translation: I've been disastrously wrong before, and I will almost certainly be wrong again. Good thing the stakes aren't high.
I'd love to know what you think of the primer I've used to translate his remarks. :) Now if only we could get him to just adopt the translated message and skip all that senselessly indirect mumbo-jumbo. Thanks for slapping on a rec to the source article if you appreciate the content, and also for sharing it with your friends and family. Remember, anyone can access my articles easily simply by bookmarking the following link.