The augurs and haruspices have assembled and are struggling to interpret Federal Reserve Chairman Ben Bernanke’s pronouncements. Reports suggest that he saw his shadow which means that we’ll have another year of lacklustre growth in the economy.
I thought that the revisions in the FOMC’s estimates of upcoming GDP growth and inflation were about the most interesting part of the whole proceedings. Essentially, growth will be slower than they were predicting just a couple of months ago and inflation will be higher. My prediction is that they’ll lower their GDP projections and raise their inflation projections again before the end of the year. They’ll also continue to say that both are transitory. As are all things.
I find it interesting that nobody seems to be quite as appalled at the fact of the press conference as I am. If the Chairman of the Federal Reserve is a technocrat, he or she shouldn’t need or want to have a press conference. If the Chairman of the Federal Reserve is a bureaucrat, is he or she acting as a proxy for the president in giving a press conference? Does the president have sufficient control over the Fed chairman for this to be effective?
If the Chairman of the Federal Reserve is a politician, shouldn’t he or she be more directly answerable to the voters for the conduct of his or her job?
To my mind more than anything else a press conference by the Fed chairman highlights the burning need to pare back the responsibilities of the Fed to something it might actually be able to accomplish. I propose limiting its responsibilities to preserving the health of the banking system and holding its governors responsible with civil or even criminal penalties if they fail to do so. Much simpler and more effective than Dodd-Frank.
At the very least shouldn’t the Fed chairman have some nondescript person leaning over his or her shoulder during a press conference whispering you are not a god?