Last week, Fed Chairman Ben Bernanke conducted the first scheduled press conference in the central bank’s history. On the surface, the idea of shining a light on what has traditionally been an opaque institution seems laudable enough – if strikingly unconventional.
But in the process, Bernanke has lowered his office into a political cesspool his predecessors tried for decades to remain above. By becoming still another D.C. talking head, the Fed chief has effectively transmogrified America’s longstanding and well-respected monetary policy into much dirtier monetary politics.
Why else would the world’s most powerful banker take to the airwaves, if not compelled by prevailing political winds and a perceived need to sell a skeptical American electorate on a series of esoteric policies that only a select few truly understand?
For almost a century, our nation’s monetary policy has been laser-focused around supporting two central tenets – job creation and price stability.
Throughout, the methods of accomplishing these two main goals were rarely questioned. At its most efficient, the Fed was also mostly invisible. If the average lunchpail American went through his or her workweek without once stopping to consider the Fed policies that allowed for the collection of a weekly paycheck, so much the better. As long as unemployment remained low and inflation subdued, the ends almost always justified the means.
But in a 2011 defined by 24-hour news cycles and a host of Twitter feeds, Facebook pages, blogs and podcasts dedicated to not only questioning all things federal but in some instances dismantling them as well, Bernanke has opened his estimable institution to the kinds of criticism heretofore reserved only for elected officials.
Consider the message of the press conference itself. Bernanke essentially told us that the Fed’s next major policy moves would be to make no moves at all. The $600 billion treasury securities buying program will end in June as scheduled. Short-term interest rates will remain near zero for the foreseeable future. Inflation will remain in the 2 percent range.
All of these policy “moves” were no-doubt well-considered and thoroughly debated at recent meetings of the Federal Reserve Board of Governors. These are the actions and non-actions that will continue to help pull us through the lingering worldwide economic malaise, at least as agreed upon by those in the know at the nation’s central bank.
Prior to Bernanke’s publicity blitz, we all might have just taken the Fed on faith and assumed its decisions were for the best. But the very nature of press conferences invites questions, and with questions inevitably come doubts and criticisms and Monday morning quarterbacking. What was once a “simple” policy declaration has instead become a political talking point.
The very divisiveness, then, that has characterized the past two decades or so of American politics has now been introduced to monetary policy. It seems logical that a Tea Party faction, for example, that is so dedicated to overthrowing the status quo in all forms might begin to question why the Fed sees fit to conduct business as usual in the face of wildly unusual circumstances.
The point here is that by opening the Fed up to questions, the institution is now more than ever expected to supply answers – answers that not everyone is going to like, and answers that will ultimately demand accountability. Maybe that was Bernanke’s intention all along, and if so, we admire his bravery.
But we can only hope that by more overtly politicizing his institution, Bernanke hasn’t made it more vulnerable to the kinds of slimy politics that have held the country’s leadership in a headlock for the past several years.
The Fed has succeeded in its narrow mission since the early 1900s precisely because it has been apolitical. But adopting political methods to help spread an apolitical message seems like a slippery slope to us – one we hope Bernanke can avoid sliding down.





