U.S. Fed opens up

Ben Pictures, Images and Photos
Yesterday the stock markets in the U.S. closed high. The Dow finished up close to 100 points on the day. The reason had little to do with earnings or specific economic news. Instead, investors were happy with a press conference given by U.S. Federal Reserve Chairman, Ben Bernanke. Actually, it wasn’t even so much what he said in the press conference that people liked, but rather the fact the he gave a press conference and took questions.

Although that may seem like a regular day for a politician in the western world, the U.S. Fed has always been a relatively secretive and mysterious part of the government. After all, Bernanke’s position is not one that he needs to be elected for. He is appointed by the President and he acts as an independent arm of the government. Many people like to say that the Chairman of the U.S. Federal Reserve is actually the most powerful person in the world and not the U.S. President. In some ways this is true because Ben Bernanke controls the U.S. Dollar which is essentially the currency the globe revolves around.

This open press conference gave a little insight into how the Fed makes decisions and that allayed some of the uncertainty that persists in the market. When ever uncertainty is reduced, the market will rise. Having a more transparent Federal Reserve is something that is necessary for the century we live in. It will strengthen the U.S. and global economy for the short and long term and will also reduce the amount of skepticism people have about the system. In part because of the relative secrecy the Fed has operated in throughout the years, there are a bunch of conspiracy theories and fear about it. Regular press conferences that include a Q&A will help alleviate that and the world will be better for it. Bernanke said that he plans to do it again. This is good news.