By Reubin Turner
City Editor
There’s a new blogger online, and he’s created quite the excitement in the world of economics where speculation rules. Former Fed Chairman Ben Bernanke announced last week that as he is now a private citizen, he will start blogging about a range of issues regarding the economy and from time to time, baseball.
Make no mistake about it – someone as experienced as Bernanke will definitely have a large following, especially those looking to see what the Fed’s next move may be with regard to monetary policy. It’s no secret that some of the current members of the Fed shared similar policy views, and it’s possible it could even come to influence the market. But, the question remains — what type of precedent is Bernanke setting with his blog, and will it open up windows to undermine the Fed?
One of the greatest tools of the Fed is the ability to be able to influence the markets through interest rates, and public announcements at quarterly meetings where they devise a plan to combat inflation and unemployment. After these meetings, economists and financiers across the world look at the press releases to analyze the Fed’s agenda. Because so many look to it before making important financial decisions, it is quite effective in directing the markets the way the Fed wants them to go.
Since this is the first time a former Fed chair has taken to a public platform like a blog, it will be interesting to see whether or not Bernanke has influence over the markets, with regards to blogs he posts on the direction of the economy. He certainly could set a dangerous precedent, however, if he publishes opinions that are contrary to the Fed’s course of action, given his former position. If economists and the general public begin to look at his blogs rather than looking to the Fed when making decisions about the future, it’s possible that he could undermine the authority of the Fed.
In addition, there has been an increasing amount of lawmakers such as Sen. Lindsey Graham who have begun to question the amount of power the Fed has, claiming the Fed should be held more accountable. Many lawmakers have disagreed about certain courses of action Yellen has taken, and think there needs to be a Congressional element added to the powers given to the Fed. If Bernanke disagrees with the Fed on a certain course of action, he will undoubtedly be used as a pawn in the game of political economics.
