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The U.S. Federal Reserve on April 27 held its first-ever press conference – an extraordinary development that generated more buzz than typically surrounds a Federal Open Market Committee (FOMC) meeting.
Many wondered if U.S. Federal Reserve Chairman Ben Bernanke would deliver clear-cut explanations or a script of "Fedspeak" when he fielded press questions for 45 minutes.
Reporters shot questions at the Fed chief as they searched for concrete answers to the most pressing economic topics:
- When will interest rates be raised?
- Has quantitative easing done anything to boost economic growth?
- Do you still believe inflation is "transitory"?
- And what else will be done to support the economic recovery?
Bernanke defended the central bank's strategies and said that the Fed policies will help navigate the U.S. economy through a temporary economic growth slowdown and transitory inflation.
The first-ever Fed press conference was a big deal not only because people wanted to hear how Bernanke answered these questions, but because he was willing to answer them at all.
Fed-watchers and investors usually have to scrutinize every word of the Fed's press statement to figure out what market moves to make. However, increased demand for Fed transparency in the wake of the 2008 financial crisis has changed that.
But many felt that Bernanke's answers failed to shed more light on the Fed's policy decision-making. People complained Bernanke didn't give many clues on what the Fed's moves will be going forward.
This prompted last week's Money Morning "Question of the Week": What do you think of the outcome of the first-ever Fed press conference? Did the press ask the questions you wanted them to? What do you think about Bernanke's answers and the actions the Fed is taking? Do you like the new press conference format and see any value from it?
The following responses show readers' frustration over not just what Bernanke said, but how he said it.
A Staged Event
As I listened to the press conference, and especially the questions posed to U.S. Federal Reserve Chairman Ben Bernanke, I got the clear impression that the whole thing was staged, or at least managed. There were no tough questions, and several times he seemed to acknowledge a question that he had specifically prepared for. My suspicion ahead of time was that this was intended as a public relations exercise, with propaganda rather than honest communication as its primary purpose, and now I am sure of it.
Despite the apparent ignorance manifested in some of Bernanke's comments, I believe that he is a very smart man, but one who finds himself in a situation that he never thought would come to pass, and is desperately seeking to paint a public picture that puts the blame for the coming collapse on someone else. I doubt that it will work. As a nation, we have tens of trillions of dollars in bad investments that will have to be written off, sooner or later, and this will bring about a depression, which most of us sense is already underway.
Despite Big Ben's prior boasts, about how he could prevent another depression, I think he is finding that the only real difference he can make is whether we are going to have a deflationary depression or a hyper-inflationary depression. The former is better for the people and the country, the latter is better for the banks, and he is a banker to his core. I think we better prepare for massive inflation.
— Gordon F.
His voice was clearly stressed. Even with all our disagreements about policy, I still felt bad for him in this respect. It reminded me that he is both part human and part banker.
QE3 On the Way
There will be QE3…a stealth form of it by means of reinvesting maturing Treasuries into new balance sheet expansion. The truth is that Bernanke had to speak to the public because the Fed has lost much credibility, since it has used every tool to support the economy but has in fact caused more harm than good. With ongoing concerns of low rates, high inflation, and insurmountable U.S. debt, the Fed needs to calm the public. But it is too late….the game is over and Bernanke knows this. A dollar collapse to its intrinsic value of zero is inevitable. Until then, QE3, QE4, QE5, and so on.
— Borzin K.
Putting the Blame on Ben
In the short term Ben, you're a hoax .In the medium term you should check to see if you own any morals and ethics for what you have done. In the long term you are going to be frighteningly wrong about what you have said and done, you will put your head in your hands and sob your eyes out. You have done this to the world economy.
— Dan R.
Playing it Safe
The Fed is saving face and keeping inflation low; they can always raise it up. Dollar and real estate go down; food, gas, silver, power bills, medication prices go up.
A new age, a new world order?
— Maurice O.
More openness is good news for all!
— Shailesh P.
Not much Bernanke can do, being the co-captain with Obama of the Titanic…
Be sure to answer next week's question: What do you think are the biggest threats to the U.S. economic recovery? Will inflation, unemployment, government spending, terrorism or some other factors derail the economy's improvement? Or are many of these "threats" overblown? Are you preparing for a weak or strong economic recovery?
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Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at firstname.lastname@example.org. Make sure to reference "question of the week suggestion" in the subject line. We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
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The Death of the Dollar: Will the Fed Kill the Greenback at Tomorrow's FOMC Meeting?
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Did Ben Bernanke Hint at QE3 During Historic Fed Press Conference?
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Question of the Week Feature