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April 15th, 2009

Fed Press Conferences: Good or Bad Idea?

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The Federal Reserve said this week that the central bank may consider holding regular press conferences to inform the American people of their latest discussions and possible strategies to combat the ongoing crisis:

“I think it is important for the public to understand what is going on and to know that the government is trying to solve the problem,” Mr. Bernanke said in an interview. “They should know we have a plan and a strategy.”

“The American public is seeing things happening that it doesn’t like and doesn’t understand and nobody is really explaining it to them,” says Alan Blinder, a Princeton professor and former Fed vice chairman. “That was true in the Bush administration and it remains largely true in the Obama administration. The Fed is filling the void.”

The recession has spurred confusion and created the need for officials to explain the financial and economic process as well as its accompanying solutions to those outside political and economic circles — the Americans on Main Street.

The extraordinary number of taxpayer-supported bailouts has generated an obligation amongst Federal officials to detail where the taxpayers’ money went and how it has been spent.

While the disclosure and apparent honesty should be appreciated by consumers, there are some concerns that the press conferences could create more confusion than clarity in the markets and the public. Much as the overly-general and non-specific addresses in the early weeks of the Obama Administration sent markets tumbling, ambiguous or in-concise explanations of upcoming Federal policies or strategies could spread more harm than good.

Do you think it’s a good idea for Fed to regularly address the public in order to disclose their latest strategies and/or policies (in an easier-to-understand language)?

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2 Responses to “Fed Press Conferences: Good or Bad Idea?”

  1. Mitch Says: April 18th, 2009 at 1:38 am

    I think it’s a good idea, but to tell you the truth, I’m not sure they’ll be able to put it into language that the average, every day person will understand.

    Back in the day when Greenspan used to talk, I have to admit that I needed someone to interpret what he was saying, and I have the same problem with Bernanke. It’s not that I’m a dumb guy, I hope, but their delivery is so drool, and most of what they’re saying is uninteresting and technical, that I know I zone out.

    So, if they can overcome those issues, then it’ll be good. If not, then it’s just a waste of time.

  2. Tim Manni Says: April 20th, 2009 at 12:39 pm

    Hey Mitch,

    Especially during these economic times, I think taxpayers deserve an explanation — most of the time they’re spending our money anyway. Conveying the concepts could prove difficult — good point.

    Do you think the press conferences could have the potential to wreak havoc on the markets, via confusion?

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