The Grinch (from the Dr. Seuss children’s book) and Santa are often invoked to describe what’s happening with consumer spending around the holidays. If consumers are able to spend more, then Santa’s responsible. But if they’re unable to spend more, then they’re forced to be more penny-pinching (which isn’t like the Grinch really, but more like Scrooge; either way, there’s the sense of Christmas being ruined).
Because the Federal Reserve has something to do with how much money is flowing and how much consumers believe they can spend, the Fed itself is sometimes referred to as “Santa” or “Grinch.” Santa means the Fed is “generous,” or allows more money to trickle into the economy. Grinch means the Fed is “tightening” or “holding back” or “restricting” the amount of money. It’s not always the Fed responsible for a Grinch-vs.-Santa-inspired holiday season; sometimes it’s Congress or individual members of Congress. (See the October 2013 Supermaketguru blog post “Supermarkets Should Get Ahead of A Grinch-y Congress” and the Greenberg Financial Group post from one year ago, “Grinch.” And here’s a recent Guardian piece comparing Congress with Scrooge.)
In a 2005 CNN article, “Greenspan: Santa or Grinch?” a graphic morphs Fed Chairman Alan Greenspan’s face into that of the famous Grinch. The graphic’s caption begins “Santa Al or Mr. Gr(eenspan)inch?” In December 2007, the InvestorCentric blog asked “Is Ben Bernanke More Like Santa Claus or The Grinch?”
The November action countered that impression, and I worry that ignoring the continued strength of economic activity even temporarily may reignite concerns about our determination. At the risk of dubbing the Fed as the Grinch who stole Christmas, it seems to me we need to snub the brakes again without delay.
At the November 1983 FOMC meeting, Roger Guffey, Kansas City Fed President, said:
I would come out very much as Tony has for retaining our current position with a borrowing level of about $650 million. This may be the month to sit back and enjoy it. Come next month, before Christmas, I believe we may be the grinch who takes away Christmas. It may be appropriate to make a modest move, even in view of the international situation, in the upcoming month or two.
A December 1989 speech by Thomas C. Meltzer, President of the St. Louis Fed, starts with a reference to Dickens’ A Christmas Carol and then says:
My remarks, on the other hand, are far more closely akin to that other Christmas story, [about] the Grinch that stole Christmas. Simply put, I’m here to make it clear that the Federal Reserve is not Santa Claus. That is, despite widely-held beliefs to the contrary, the Federal Reserve cannot provide the necessary conditions for long-run price stability and, simultaneously, deliver short-term “fixes” for other economic problems.
“Grinch” is preferred slightly over “Scrooge” as an opposite of Santa when it comes to holiday spending. Yet the character of Scrooge is so much more closely identified with money and miserliness, whereas the Grinch, for whatever reason, merely hates celebratory joy. Maybe it’s because the Grinch has (or thinks he has) the power to take away Christmas. Scrooge, although disliking Christmas, really wants people to stop asking him for money and leave him alone with his gruel. (Of course, both characters are positively transformed by the close of the narratives.)
One could analyze the difference between Scrooge and the Grinch, in what way they’re opposites of Santa, and how that would change the way they might reflect the Fed’s behavior, or people’s behavior, or the government’s behavior. Or one could just say Bah! Humbug!
The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.
Amy Farber is a research librarian in the Federal Reserve
Bank of New York’s Research and Statistics Group.