Media's New Obsession: Misunderstanding the Fed

It seems that the majority of our country's business media feels that it, too, must vette Ben Bernanke's ascension to Chairman of the Federal Reserve System. Aside from Brian Wesbury's recent excellent op-ed piece in the Wall Street Journal, most media pundits have been claiming that Bernanke is now focused on proving his credentials to them.

How drole. If you can't be Chairman of the Fed, tell everyone he has to prove himself to you. Thus, we have the untutored CNBC "senior economics correspondent" Steve Leisman babbling ceaselessly with his "guests" about Ben Bernanke's actions, thoughts, intentions, and performance. It's not that obtuse. I seriously doubt if Bernanke even cares what Leisman thinks or says.

Rather, as Wesbury wrote, Bernanke is busy simply repairing the damage of the on-again, off-again monetary policy which marked Alan Greenspan's last few years. Not to criticize Greenspan. He did a marvelous job under very difficult circumstances. However, the result of mopping up the aftermath of the burst technology investment bubble of 1999-2001 was some confusion as to which indicators to watch to manage monetary policy.

By historical standards, today's rates are very low. But direction and a sense of vigilance are important for the financial markets' long term health.

Despite the media's hand-wringing, the Fed continues to behave in the long term best interests of the US economy and financial markets. This past week's coordinated comments by Bernanke, Moskow, and the Atlanta Fed President, all addressing the current 2% rate of inflation as being 'at the high end of their comfort level,' were evidence of how effectively and professionally managed Federal Reserve System is. There is no mystery to anyone paying close attention to the FOMC members- they have repeatedly stated that their decisions on rate policies are data-driven.

The Fed is doing its job by managing inflation. The media continues to do its job of selling print/online eyeballs to advertisers by, when necessary, creating uncertainty where there is none.