The Federal Reserve was established in 1913. In the first 98 years of its history, the Federal Reserve never had a press conference.
It had no press conference during the Great Depression or during World War II. Why now in 2011, when most economists - and the president himself - say the economy is much better than it was a couple of years ago? Why now does the Federal Reserve need to have a press conference?
Last April, at the very first press conference, Federal Reserve Chairman Ben Bernanke talked about how the economy looked like it had hit a soft patch and that inflation had picked up. He said he thought the soft patch and the inflation issues were just temporary.
He stated that the QE2 program (quantitative easing) was not a panacea for the economy and that he had warned Americans about that possibility before he initiated the program back in 2010.
Since 2007, when the subprime mortgage mess began to show its true colors, the Federal Reserve has lowered interest rates, and done QE programs, which are essentially purchases of assets that no one else wants to buy.
With interest rates now at zero and the QE programs not producing very good outcomes, it looks like the Fed, with the press conferences, is getting the American people ready for the realization that when it comes to Federal Reserve monetary policy, the Fed has used up most of its gimmicks.
At the last press conference, Bernanke did suggest that if the economy lost more ground that the FOMC could purchase more assets (basically a QE3). But, based on the lousy performance of the QE programs so far, another QE program may do more harm than good.
It does not look good on the fiscal side either, with the government already borrowing over a trillion dollars per year, politicians may not be able to borrow more and therefore be able to spend more if another recession does come along.
In the last three years the politicians have run the debt up by $4.3 trillion, the Federal Reserve has had interest rates at zero and increased its balance sheet by $2 trillion, but many Americans still feel we're in recession.
This is a great example of how ineffective government is. However, it seems that's what Americans want: More government intervention and more government control of their lives.