April 27th begins a new chapter in Federal Reserve history: the Fed joins other major central banks in having a press conference after its monetary policy meetings (the Federal Open Market Committee). Apparently the record lows in public support for the Fed, along with rising gas and food prices, have driven Bernanke to attempt to change the narrative. After all, his appearance on “60 Minutes” did wonders for the Fed’s reputation. I’m excited to hear even more about his childhood in Dillon, South Carolina or his time working at South of the Border. Maybe an enterprising reporter could ask how much menu prices at South of the Border have increased since Bernanke took over the Fed.
Perhaps you’ve noticed that I don’t have high expectations for his press conference. It is probably fair to say that no Federal Reserve Chair has had as much public exposure as Bernanke. Yet with all those public appearances, he has consistently managed to avoid any real discussion about the costs and benefits of the Fed’s actions. Are we likely to hear concern about food and gas prices, and how such are being driven by loose money? Probably not…just more on how increasing world demand is to blame. Just like it was the “global savings glut” that drove interest rates earlier this decade, it is always somebody else’s fault – never the Fed’s. They are capable of only good.
Hopefully Bernanke will at least avoid the Obama line that it is those “speculators” that are behind the increase in energy prices. After all, if we believe the governments of Europe, those evil speculators brought down Greece too.
As per usual, I truly hope I’m wrong here. Bernanke has a real opportunity to be honest and straightforward with the American public. We don’t need another lecture. We need to hear that the Fed isn’t a slave to some imaginary Phillips Curve or that we can’t have inflation with slack in the economy (where was Bernanke in the 1970s?). The real risk is that Bernanke uses the press conference to drown out the many voices of concern and dissent on the FOMC. Which, of course, would be a real irony given all of Bernanke’s talk about “democratizing” the Fed when he first became chair.