Unveiling the Wizards Behind the Curtain

The Fed has always been a fairly secretive organization. Much of what it does is shrouded in mystery, particularly as it is being done. Indeed the mystery surrounding the Fed is so ingrained in market culture that traders and analysts have been trained to be happy just to receive updates of actions sometime after the fact. This mystery is helpful to the Fed as it allows its autonomy to remain intact without too much of a fight. It is also arguably necessary to allow central banks to act in secrecy because transparency can often rob their moves of effectiveness and allow speculators to enter markets with detrimental effect.

However, Ben Bernanke has been slowly changing the way the bank does business. One of the largest changes came recently, as the Chairman gave (frankly shockingly) the first press conference in the history of Fed Chairs. Gregg Easterbrook has more on this at his blog here. Critics have suggested that he didn't say much in the press conference, but 'baby steps' is the cliche that comes to mind in response to such complaints. We would also remind such detractors of the Greenspan years...


Such transparency has been welcomed by many as a useful part of the broader market dialogue. For example, it appears that the press conference confirmed what many market participants already supposed; there probably won't be a rate change before the end of this calendar year. This might seem to be fairly mundane, but it past times traders often had to rely upon cryptic and infrequent press releases to come to similar conclusions with less degrees of certainty. Mr. Bernanke's new policies haven't only benefitted Wall St., however. In addition he has taken it upon himself to make information available to common citizens. One example of this can be found here: