Widely Cited, Never Said

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"The last duty of a central banker is to tell the public the truth."

For more than a decade, this provocative quote credited to Alan Blinder has dogged the Princeton economist and former Federal Reserve vice chairman, not only because it contradicts his true feelings on the subject—his 2004 book, "The Quiet Revolution," extolled the central bank's increased transparency since the 1990s—but because he doesn't remember ever saying it.

"If anybody knows me at all," Blinder says, "that quote is the exact opposite of what I believe."

Nevertheless, the quote—purportedly from a 1994 PBS television interview—has become one of the most widely used citations from him. It has wound its way into online newsletters, blogs and books, and grown into a favorite "gotcha" of anti-Fed conspiracy buffs who use it to frame their arguments against U.S. monetary policy (you can't trust the Fed—even Blinder says so).

But thanks to a tip from an associate of an obscure free-market commodities organization, Blinder has finally determined that the quote is pure hogwash.

Blinder himself had searched for years through his archives of reports, op-eds and interviews to locate the quote's origins, while it grew into a motto that financial and investment commentators routinely described as something Blinder "famously remarked."

Blinder thought there was an outside chance he had uttered the words in the context of criticizing central bankers' secrecy, or in simply running down a list of obligations that bankers needed to adhere to. "I didn't remember the exact words at all, but in either of those contexts, I was perfectly prepared to believe I had said that or wrote that once," says Blinder. But in November, Blinder was contacted by an Australian researcher affiliated with the Gold Anti-Trust Action Committee (GATA), a fringe group that makes hay of accusations that central banks and futures exchanges overstate government gold reserves to artificially lower gold prices.

The remark supposedly made by Blinder fit nicely with GATA's purposes. But unlike writers who copied the phrase out of the ether over the years, the researcher for GATA wanted to verify the original source material—and like Blinder, ran into a black hole when there was nothing to be found on PBS Nightly Business Report transcripts.

The researcher did, however, find a 1999 Wall Street Journal article that seems to prove the quote is an urban legend. The article was about a research survey Blinder conducted on world central banker attitudes, in which officials had ranked "a duty to be open and truthful with the public" dead last among criteria on why credibility was important to them. "The exact words of that malicious quote don't appear there," says Blinder, "but you can imagine it somehow coming from that."

Not only does the supposed quote get the words wrong, it also flops on the attribution (bankers ranked truthfulness last, not Blinder). In fact, in the source paper Blinder wrote that his own opinion was that central bankers had their priorities upside down—that being "open and truthful" should be paramount. "This is my personal favorite reason for why a central bank should strive to be credible, which to me means matching its deeds to its words," Blinder wrote in 1999.

Blinder hopes exposing the fraudulent quote can begin the process of wiping it from the record. A tall order, indeed: a Google search of the phrase turns up more than 70,000 references, and it has even appeared in some recent econo-doom books like former New York Fed supervisor Chris Whalen's "Inflated: How Money and Debt Built the American Dream."

"I could never figure out a way to expunge it," says Blinder. "The Internet is a totally undisciplined media. It doesn't print retractions." 

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