The short but absurd tale of three investors

I wrote this in a moment of levity.. which is my way of coping with increasingly surreal capital markets. I interact with central bank/government personnel on a regular basis, so there is no policy-maker bashing agenda!

The short but absurd tale of three investors*  

“It was rumored that three major investors had fled the markets and taken refuge in the mountains, carrying with them untold amounts of liquidity which was dearly missed. Word got around that these investors were hiding in a cave, so seven notable central bank chiefs went to see what they could do to persuade the missing trio to come out and make the world whole again.

Huddled in the dark, cold cave, the investors became better acquainted. One of them was there because he was afraid of deflation and sick of getting skinned – so he cashed in all his blue chips and bought U.S., Japanese, and German bonds. “Funny,” another one said. “I am here because I am afraid of inflation and utter chaos just around the corner. So I cashed in my stocks and bonds, bought all the gold I could get… and this shovel—to dig out more of the shiny stuff.” The third investor was embarrassed. Always a follower of the latest trend, he had followed the two other investors into the cave but didn’t know he was supposed to sell all his stocks or buy a shovel.

Outside of the cave, the seven central bankers exchanged theories of how to get the investors out. Afraid of being perceived as agreeing with one of its cross-oceanic peers, the first central banker proposed to the group: “What these guys need is someone to show them that annual inflation will be below, but close to 2.1%. Zhat’s the key”–Revealing a slight accent.

The second banker nodded agreeably and said: “Perhaps. But here is what I think. History shows us we need to be unconventional, BOLD. Spend a trillion here, two trillions there. Try and replace the liquidity we lost. If we do this right for long enough, the three amigos will think that we don’t need them as much and will come back.” “Mais non, zhat’s crazy!” interrupted the first banker. “BUT,” continued the second banker, “if that doesn’t work, then my next plan calls for spraying them with water, blowing cold air into the cave, AND when they come out– get this – we greet them with warm, dry towels. How could they not love us at that point?!”

A few years have gone by since the first attempt to get the investors out of the cave and the outcome is yet uncertain. It is known that one investor came out to the edge of the cave, but run back inside after he found a shovel. Some say one of the investors died from the cold water attempt. By all accounts, the central bankers are in it for the long haul. Rumor has it that they had new offices built nearby, with windows facing the cave’s entrance to better spot the moment that the recalcitrant three (or two) decide to come out.

* The names and interest rates in this story have been withheld or modified to protect the innocent. All similarities to real central bankers or their policies are coincidental.