Ben Bernanke's voice has been known to put humans into a trance even under the best of circumstances, and I was under the influence of a fever and some cold medications. Still, other observers reported a similar reaction to my own. The Fed Chair's press conference felt like a sensory deprivation tank, but with extra-credit math questions.
Was Mr. Bernanke calm? Put it this way: I watched the video feed for several minutes before I realized it wasn't a photograph. A lizard can stay motionless for so long, you start wondering if it's real. It was like that. Then Bernanke turned his head, and I got the same feeling you get when the lizard finally blinks.
That's the Robitussin talking, not me.
Bernanke needed to do two things today: First, he needed to avoid making a careless remark that would roil the world's markets and set off a panic. Mission accomplished. And to avoid excessive scrutiny, he needed to be as placid and boring as possible. He might have overshot the mark on that one.
How did he do it? Perhaps he mastered the serene "void" mind of Japanese swordsmanship from The Book of Five Rings. Or maybe he dropped a lot of downers. Either way, it was especially hilarious to read this afterwards: Sarah Palin says the White House released Obama's long-form birth certificate this morning to "distract you" from Bernanke's appearance. Right. Because otherwise everybody would be glued to their sets, hypnotized by his performance, each of them transfixed and motionless ...
... like lizards.
If only Bernanke had offered a glimpse of hope for the millions of Americans battered economically since he assumed leadership of the Fed. If only he had made the case for jobs. If only. But he didn't, and that's tragic.
That's not the Robitussin talking. That's me.
Master of the Temple
The Federal Reserve's been called the Temple ever since William Greider popularized the term in his 1989 book, Secrets of the Temple, which is still a must-read. (It's available at fine booksellers everywhere -- which is to say, you can buy it online). Although this secretive institution was created by a democratically elected Congress, it has presided over our economic fate without public accountability ever since.
Yes, the Fed chair made a public appearance today. As the High Priest of his temple, it's his job to ensure that the public doesn't lose faith in its power. They could. They keep offering sacrifices, and there's still no sign of rain. And that's attracting attention to the Fed's secrecy and lack of accountability. So, like any good temple priest from ancient times, Mr. Bernanke reasserted his air of authority by mumbling in an archaic language understood only by his fellow initiates.
Yes, this was the first press conference ever given by a Fed chair. That means Bernanke managed to give the appearance of being less secretive by holding an event which, as many observers noted, managed to be both historic and boring at the same time.
The Many Moods of Ben Bernanke
But it wasn't really boring, if you were listening carefully. Uninformative? Pretty much. Disappointing? Yeah. But it was fascinating to watch a smart guy not communicate so effectively. And he didn't do it by saying too little. He did it by saying too much.
And by adopting a lot of different personas (personae). Instead of one Ben Bernanke, we got a whole roomful: Bernanke the Job Creator, Bernanke the Budget Cutter, Bernanke the Activist, Bernanke the Fatalist... He used some sort of "identity easing" to increase the Bernanke supply, then hid in a flock of decoy selves.
So how can you tell which one's the real Bernanke? By paying attention to at what gets done, not what gets said.
Bernanke did offer some golden words, however -- literally. The price of gold soared after his press conference. Let's hope Mr. Bernanke's Things To Do list for today didn't include "Build confidence in the dollar."
But Bernanke never said the words that might have improved the economy and helped a lot of people. He came close. He almost said we need a strong job-creation policy. But then, he almost said lots of things.
And while it was good of him to be so "transparent" and all, it would have been even better if he hadn't first waged a two-year battle to keep the Fed's discount lending a secret -- and if it hadn't taken a court order to get them released.
Where are the jobs?
Bernanke indicated that the Fed's "quantitative easing" policy -- buying up tons of government bonds to increase the money supply and cool inflation -- was coming to an end. A reporter asked, should you really do that with unemployment near 9%? Another asked, why is the public so dissatisfied?
A cloud of phantom Bernankes arose in response. Jobs are important, said one. Jobs are part of our dual mandate, another agreed. But policies to address long-term unemployment are outside of our mission, frowned another. Yes, another agreed, nodding sadly. Unfortunately, we're a macroeconomic institution.
One of the Bernankes appeared to be struggling to say something -- something important. Yes, yes, we whispered. Say it! Say, "Quantitative easing and discount windows can only help the entire economy when they're accompanied by government policies which require the banks to use the advantages they bring in an economically constructive way."
But that Ben Bernanke fell silent. Then he shivered, grew translucent, and faded from sight. Another Bernanke spoke in his place. Strategies for addressing long-term unemployment were, he said, "out of the scope of the Fed."
Enter the Hawk
But that "outside our scope" language evaporated quickly when budget deficits came up. All of a sudden, policy-shy Ben was replaced by policy arm-twister Ben. Those politicians better shape up, this shadow growled, or there'll be hell to pay.
A question about Standard & Poor's recent threat to downgrade the US government's credit (they were never that aggressive about mortgage-backed securities, were they?) brought out Bernanke's inner Deficit Hawk. He was "hopeful" the report will "provide one more incentive to address this problem," he said. "It's the most important economic problem this nation faces."
("Most important problem"? Better make that "dual mandate" one-and-a-half mandates instead. Sayonara, jobs!)
Bernanke added that it's "encouraging that we're seeing efforts on both sides of this aisle... We're still a long way from a solution, but I think it's of highest importance that our political leaders address this problem ..."
(Sorry, jobs, but that clinches it: Fed Chairs may date mandates like you, but they always marry the other kind.)
In other non-news, Bernanke said that many of our current economic woes were driven by fuel prices, which the Fed doesn't control. Which is true... sorta. The Fed does influence the value of the dollar, which in turn affects prices for commodities like oil. On the other hand, a lower dollar should help jobs and economic growth at home... especially if it's accompanied by aggressive job creation policies.
So why not push for better jobs policies? Because Shy Ben comes out when jobs are mentioned. Tough Ben only appears when the topic is deficits.
Bernanke didn't say today, nor has he ever said, that the real bubble that shattered the economy was really a credit bubble (to use Barry Ritholz's term), not a housing bubble. He didn't acknowledge that the models and assumptions that have guided US monetary policy for a generation were disproved by the events of the last three years. And he won't. He can't - not without questioning this entire career. And that would take real courage and wisdom. I thought he might have that in him. Guess not.
Bernanke could have said that the deficit must be addressed, but that the best way to do that is by starting with an aggressive program that puts people back to work, expands the economy, and then provides a strong foundation for addressing government deficits. He didn't say that.
Sure, he gave a lot of lip service to the Fed's jobs charter -- finally. For two years he barely mentioned it, but today he actually used the phrase "dual mandate" -- twice! That's good news... if you think that golden words can create jobs. Otherwise it's reasonable to assume that Bernanke wanted to look concerned about jobs, without actually doing anything more about them.
A Ben for all seasons
The bubble exploded and shattered on Bernanke's watch. Then the banks feasted off the goodies the Fed gave them, fattening themselves as the rest of the country starved. Bernanke's "quantitative easing" was never accompanied by what might be called "qualitative easing" -- targeted policies designed to ensure that some of the financial advantages given to banks by the Fed were used to help the overall economy. Nope. And Bernanke still won't tell to the country or its leaders why those policies are needed.
S-sh-sh-sh. That kind of talk makes Tough Ben go away and Shy Ben come out.
It's not about Ben Bernanke in the end, anyway. It's about a broken political system and the economic powers it serves. Under this system, Bernanke's free to lower the interest rate and give American mega-banks billions in near-zero interest loans. And he has. Those banks can then keep his cheap money, refuse to use it constructively, and get rich by bleeding the economy dry instead. And they have.
As long as that behavior is acceptable to leaders in both parties, we'll keep on struggling. The next Ben Bernanke will differ in appearance only. He or she will serve the same banks, make the same mistakes, then offer the same ritual murmurings afterwards. They say that talk is cheap. But this talk distracts us from our most urgent economic problems, and that makes it very expensive talk. So expensive, in fact, that we can't afford it any more.
You could let golden words rain down night and day for a thousand years. You could bury this country in words from coast to coast, words that glittered like gold coins, and it wouldn't matter. Because words aren't coins. Words are words, and coins are coins. And while a few people keep raking in the the coins, the rest of us are still struggling to make change.