Practical Economics

Bernanke Taking His Case to the People

Jerome Idaszak

As inflation hawks and others peck at the Fed’s easy money policy, its chief is mounting an unusual defense.

He’s been on 60 Minutes twice, a town hall meeting in Kansas City, Mo., that aired on cable television, and in early February he’ll answer questions at a National Press Club luncheon. Not a surprising schedule for a federal policymaker -- unless that policymaker happens to be chairman of the usually reserved central bank. Unlike his predecessors, Federal Reserve Chairman Ben Bernanke is going public in an effort to explain the Fed’s actions to national audiences and to assuage fears of inflation down the road.

Brief policy statements from the rate-setting Federal Open Market Committee used to be the norm -- the principal source of clues for Fed watchers eager to discern the future direction of interest rates. With little more to go on, the bond market plus legions of bankers, economists and others parsed phrases and pored over every word of the Fed’s carefully considered prepared statements. Few others paid much attention to the workings of the central bank. But the extraordinary events of the past three years and the Fed’s reactions to them have pushed it and its chief into the public spotlight.

Critics say that the Fed is printing money -- with disastrous consequences likely -- and that Bernanke is exercising power as no previous central bank chief has done. Usually, the head of the Fed would reply to such criticism in a forum dominated by Fed cognoscenti, bankers and businesspeople -- if he replied at all.

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