Does Fed chairman Jerome Powell want to be remembered as Scrooge who ruined Christmas? Let’s hope not
It was the night before Christmas, and old Scrooge sat in his counting house in Washington DC. A gloom resembling that of the US Federal Reserve pervaded Scrooge’s office and he himself bore more than a passing resemblance to Fed chairman Jay Powell. A single candle lighted his desk and served to warm his hands as he thumbed through the ledgers of federal finances.
“Mr Scrooge, sir,” asked his clerk Bob Cratchit in a trembling voice. “Might I possibly have tomorrow off to be with my family on Christmas Day?” Scrooge scowled deeply: “What’s Christmas got to do with it? There’s been too much merry making already in this country, and anyway I don’t pay you to be with your family.”
All eyes on Fed chief’s comments as China’s growth outlook plays big part in direction of US interest rates
Cratchit crept back miserably to his desk and as he did so, Scrooge’s nephew (who in turn bore a striking resemblance to Donald Trump) breezed into the counting house and cried: “Happy holidays Uncle. I hope you’ve got a Christmas rate reduction in store for us.” But Scrooge snarled: “Bah! Humbug! All you’ll get from me is a rate increase. So, be off with you!”
“But Uncle,” protested the nephew. “What about the spirit of giving at this time of the year?” Scrooge looked for a moment sad as well as angry. “There have been too many monetary giveaways already around here and look where it has got us – into a state of monetary euphoria and debt dependency. It’s goodbye to all that from now on.”
Scrooge cast his mind back to the days of Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen, who had occupied the counting house before him and who had doled out vast quantities of money in the form of quantitative easing, or QE. “Didn’t we give away piles of money, and not just at Christmas?” he snapped. “And now all we have are mountains of debt.”
His musing giving way to an angry outburst, Scrooge hissed at his wretched and shivering clerk: “You, Cratchit – get back to calculating your ‘dot plots’ and earn your coppers the hard way. Don’t look to me for charity.”
To his nephew, he snapped: “Money shouldn’t be given away. It has to be priced properly. So, I’ll thank you to be gone!”
When he finally closed his gloomy counting house, snow was falling and Scrooge made his way to his lonely home in Foggy Bottom to eat a dish of warm soup before a low fire. Suddenly, there came a clanking of chains, the door flew open and there stood the ghost of Scrooge’s old partner, Jacob Marley.
“Scrooge,” moaned the wraithlike Marley in doom-laden and chilling tones. “Repent now before it is too late. Repent of allowing yourself to become a slave to monetary orthodoxy and pushing ahead with interest rate rises even when you can sense the suffering that it’s going to cause – especially at Christmas.”
Scared though he was, and knowing that there was at least some truth in what Marley’s ghost was saying, Scrooge was still having none of it. “Bah! Humbug!” he barked. “All this quantitative easing has made people believe the money grows on trees and that all they need to do is to plunge further into debt. And it’s destroyed the price function of credit markets.”
Marley was confounded and he clanked away, chains rattling as he went, but not before warning Scrooge that he would “receive further visits” that night. Sure enough, in the early hours of the next morning, Scrooge awoke in horror to see another ghostly figure standing at the foot of his bed.
“Ooh,” cried Scrooge in fear. “Who are you and what do you want with me? Are you another ghost?” The spirit nodded his head. “I am the Ghost of Christmas Past,” he moaned. “Come with me, Scrooge.” The window flew open and they whirled off into the night and through the swirling snow.
After a while it grew warmer and they descend into the streets of Washington, but on a bright summer’s day when the winter of discontent in 2018 was still well into the future. The Fed was still in accommodative mode and people were spending freely in a booming US economy. All seemed well with the world.
“Ah,” said Scrooge. “These were the days of plenty and contentment.” But he quickly corrected himself and added that everyone was living in a “fool’s paradise” at that time. “Maybe,” said the spirit. “But the economy was strong and there was joy in the world before you became a Scrooge in your counting house.”
Then, as Scrooge mused upon those balmy days, they were suddenly off again with another whoosh, flying fast through the freezing air until the miser found himself back in his chilly bed in a wintry Washington. But scarcely had he pulled the blankets over his head than another spirit appeared.
“I am the Ghost of Christmas Present – come with me Scrooge,” he said and off they went. It was Christmas Day and Scrooge was bidden by the spirit to look in at windows of the Federal Reserve office, where the heating had been turned off and where he could see a cold and lonely Bob Cratchit labouring away, unable to be with his family.
Scrooge felt a vague pang of guilt, but he refused to melt his hard attitude. Christmas should not be about charitable impulses of “giving” but about “saving rather than spending”, he told the spirit. “We have to restore monetary discipline and the only way we can do that is by raising the cost of money. So don’t try to melt my heart.”
He was whizzed back to his home once more, only to be confronted by the Ghost of Christmas Yet to Come. “Let us go now to the not too distant future, where you can see the fate that awaits you,” said the gloomy ghost. They flew off once more into the bitterly cold night air.
Once more they landed before old Scrooge’s counting house, but now it was empty and bare with its rotting shutters banging in the wind against the window frames, and a terrible air of desolation clinging around its boarded-up front door, to which a demolition notice had been nailed.
Someone had scrawled a mock memorial plaque on the door saying “Miser Scrooge lived – and died alone – here”, under which a rival graffiti artist had scribbled “good riddance”. Scrooge’s hard heart began to melt in sadness and remorse as he felt tears spring to his eyes.
“I did not think to be remembered in such a way,” he fretted. “I wanted my legacy to be one of fond memories and respect. I hoped to be remembered as someone who tried to do good in public office and to make America great again by restoring a sense of financial discipline. But ideology got the better of me.”
He turned to his ghostly companion. “What can I do to redeem my reputation?” he asked. “Is there still time?” Yes, came the reply. “But only if you act quickly. Remember that giving is never a wasted gesture.” The act of giving always comes back to the giver as a blessing, the spirit said.
Scrooge took that last of his three journeys with the ghosts of Christmas past, present and future and found himself once more back home in bed, on a crisp and clear Christmas morning. He rushed to the window and flung open the shutters to let in the sunlight, into the room and on his life.
“You, boy,” he shouted to an urchin in the street below. “A Merry Christmas. Here are some coins,” he said, flinging them down to the startled lad. “Go and buy a fat goose for me, and keep the change for yourself.” The boy sped off through the snow and returned soon with a fat and handsome bird.
Scrooge repaired quickly with it to the home of Bob Cratchit, who was just leaving for his daily labour in Scrooge’s freezing office. “Oh dear,” cried a startled Cratchit, thinking Scrooge had come to berate him for being a little late on this special Christmas morning.
“Back you go to your family Bob – and Merry Christmas,” cried Scrooge. “Here’s some money to buy presents, and I’m doubling your salary as from today.”
Stammered the startled Bob Cratchit: “Mr Scrooge, sir. I always knew you had a good heart.” Scrooge felt redeemed at these warm words.
He resolved there and then not only to put interest rates on hold and to abandon the cold logic of dot-plot rate increases, but even to announce a Christmas rate cut, to please his nephew Donald and all those investors who had been crashing out of the US stock market in the run up to Christmas.
Scrooge skipped and skated in delight along the icy streets, whistling a Christmas carol as he went. “I will announce a new era of easy money and debt forgiveness,” he resolved. “That may not work for very long, but at least it will bring some Christmas cheer. A Merry Christmas and a Happy New Year to us all!”
Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs