confabulate

verb

1. have a conference in order to talk something over
   1. We conferred about a plan of action

   Synonym:    conferconfabconsult

2. talk socially without exchanging too much information
   1. the men were sitting in the cafe and shooting the breeze

   Synonym:    chew the fatshoot the breezechatconfabchitchatchit-chatchatterchaffernattergossipjawclavervisit

3. unconsciously replace fact with fantasy in one's memory