If you were to ask a layman at a poker table what most developed countries' central banks' policies were over the last decade or so they might look at you a bit weirdly. Who in their right mind wants to discuss that at a poker table or even at a poker and drinking blog?
Well I do, because firstly I'm actually a bit of a nerd when I'm away from my first love of drunken idiocy and secondly it's actually my job. No, not going round poker tables asking weird questions but my job entails attempting to understand economic policy. It's what I call a "grown up" job despite my true mental age being in the teens - Mrs AC says I'm like Jekyll & Hyde with my dull work persona struggling to contain my inner child (hence the anonymity behind this blog - if the majority of my clients knew they were employing an overgrown child I might find myself with a bit too much free time on my hands). But economics is not an exact science and there's a lot of guesswork involved so I like to summarise my job as being like a monkey throwing darts at a dartboard - every so often the monkey will post a good score but that doesn't mean it's a good darts player.
But anyway - most western central banks have had their hands tied recently, treading a fine line between encouraging growth but also financial stability. Until the last financial crash most central bank policy revolved around interest rates - raising to prevent an economy overheating (or a more controversial line of supporting a currency) or decreasing them to promote lending and growth (or an attempt to support one's own empire which is very susceptible to high interest rates or a strong currency - cough, orange buffoon, cough).
But in these historic times of virtually zero (or in some cases negative) interest rates central banks have implemented a policy called Quantitative Easing. This entails buying assets (usually government bonds) which pushes up their price and inversely decreases their yield. The main thinking is that the holder of that asset now has cash with which to lend or invest - thus stimulating the economy.
That's the theory anyway - in practice it works differently but to the layman this is generally reported as "printing money" (which it isn't - take the situations seen in Zimbabwe and Venezuela for instance where the central bank does literally print more money to cover government spending which drives down currency value and increases inflation virtually exponentially).
But anyway - if you're still with me in the hope of me actually getting to the point I'm going to explain what I'd do if I were in charge of central bank policy. It's pretty easy - just make everyone poker players.
I've had numerous sessions over the last few months and I'm always open to chatting to my table mates, more so once I've had a beer or two. Once I've been chatting to another player for any length of time I nearly always ask them one particular question - do you make money playing? Now I don't open a conversation with this - there is some conversational foreplay involved!
Do you know what - literally no one has ever said no. Every single player I've asked this question has said they are profitable. That's a 100% success rate with a standard deviation of 0 - any mathematician will tell you that based on the statistics 100% of all poker players make money from the game.
Maybe poker is the financial equivalent of a perpetual motion machine? The latter is a hypothetical device that can do work without an energy source - it breaks the laws of thermodynamics and is therefore impossible but surely poker is different? It's not hypothetical as we've all witnessed it and there's no way it's breaking mathematical laws. Maybe it really is some sort of financial alchemy and is actually a licence to print money - which comes back to my new central bank policy of getting everyone to play poker as given the statistics it's a guaranteed wealth generator (albeit with inflationary effects which I won't bore you with here).
So to stimulate the economy we just need more poker - it's statistically guaranteed to work. Either that or it's the same old story of lies, damned lies and statistics.