WASHINGTON — Central bankers are used to having their every word parsed for signs of economic insight. But it probably helps if they recall making the comment in the first place.
Thanks to Washington Post columnist Neil Irwin, we now may know once and for all whether Federal Reserve Board Chairman Ben Bernanke ever used ketchup as a metaphor to articulate a point about inflation.
Irwin recounted on the paper's "Wonkblog" how chattering masses in Japan were convinced Bernanke — during a 2003 trip to the country as a Fed governor — had cited America's favorite condiment in discussing how Japanese authorities could pump more money into their economy.
"The story that has circulated for years among Bank of Japan officials and repeated in a book by economist Richard Koo is this: In Bernanke's May 2003 visit, he made the point that a central bank should always be able to create higher inflation," wrote Irwin, who also discussed the mysterious incident in his book "The Alchemists: Three Central Bankers and a World on Fire." "If buying financial assets to pump money into the economy wasn't enough, it could just buy anything-even tomato ketchup-and accomplish the same result of increasing the supply of money in the economy and the price level."
As Irwin pointed out, "Bernanke doesn't remember saying it and is quite doubtful that he did."
Through some further reporting, the journalist now argues that Bernanke may have been confused with John Taylor, a former Treasury undersecretary who now teaches at Stanford. Irwin wrote that although Taylor does not recall making the ketchup remark during his 2002 trip to Japan, the economist has been known to use the metaphor in classes, and his former Treasury aide on the trip, Tony Fratto, does remember Taylor making the comment.
"It seems quite likely that this is what happened: Taylor made the amusing ketchup comment. In the retelling, it was attributed to the other highly regarded American macroeconomist-turned-U.S. government official who visited at around the same time," Irwin wrote.
It would not be the first time Bernanke has been mistaken for someone else. In a memorable exchange during a 2008 congressional hearing, Rep. Marcy Kaptur, D-Ohio, asked the Fed chairman a question related to, as she put it, Bernanke's former role as head of Goldman Sachs. It became immediately clear she had confused him with then-Treasury Secretary Henry Paulson, who indeed had previously led the company.
"I've got the wrong person? …"Who were you the CEO of?" she said. To which Bernanke responded, "I was the CEO of the Princeton economics department."