Tuesday, June 28, 2011

Bernanke Blunder

The Federal Open Market Committee (FOMC, the "Fed") recently initiated the practice of having a press conference whenever they release their report on the economy and accompanying interest rate decision.  Herewith, my plea to end this madness.  Said written report already has analysts hanging on the subtle interpretation of every word (the "language" of the Fed being as important as anything policy-wise in times like these), which is precisely why a press conference accompanying its release is nothing less than dangerous.  Now, whatever is in that carefully-crafted report written by many minions over many weeks before it is polished off by the chairman is suddenly threatened with nothing less than irrelevance, immediately subject to rhetorical, cunning - and sometimes facetious and silly - questions, all designed to pry a little more out of Helicopter Ben.  (Witness how last week's press conference roiled markets despite an acceptably droll report.)  For his part, Bernanke sees this as a way both to silence his critics about his academic detachedness, and give the press corps/public a lesson in macroeconomics.  Neither is necessary.  I don't care who you are or how careful you are, an inadvertent word, a misinterpreted facial expression, even a pause at the wrong time, can be bestowed a meaning way beyond its innocent self in the glare of the TV lights, given the importance of the subject matter.  Those who read this space regularly know that I have questioned whether a society can have too much democracy, and these press conferences are a prime example.  I have a lot of respect for Bernanke and I think he has done a decent job of avoiding deflation, but he should stick to the written word for precision's sake.  (Even your humble scribe occasionally regrets what comes out of his mouth but rarely off the nib of his pen.)  But that is not my only concern with Fed Chairman media scrums.  Another huge danger I fear is that the American cult of celebrity will rear its ugly head, and that future candidates for the position may be increasingly chosen for their chiseled countenance and media prowess instead of their knowledge of economics.

TODAY'S GOOD NEWS:   Tropical fish can actually live for well over two hours in an inflated bag from the pet store.