I Don’t Like Your Tone, Young Lady
August 10th, 2010
In an article entitled, “Fed Will Meet With Concerns on Deflation Rising,” published today in the New York Times, Bernanke’s photo accompanies a caption that reads, “Ben S. Bernanke, the Federal Reserve chairman, and other officials believe that the Fed has the ability to avoid deflation.” But what does this caption communicate to its readers?
Because no one seems to be able to define “deflation” in layman’s terms, except in relation to Japan (eek!), it remains an abstract concept in the American psyche, (it’s like inflation, except it decreases something instead of increasing something, and it’s even scarier because it’s rare and only Bernanke, “and other officials” know what it is.)
Deflation is scary, and a serious threat to the American economy should it spiral out of control. But in this case, deflation is part of a larger cycle of recession and (hopefully) economic re-growth, which may not be a perfectly linear upward trend. “Frederic S. Mishkin, another former Fed governor, said that most recoveries hit speed bumps, and that economic indicators contained considerable statistical ‘noise.’ He said the Fed would be prudent not to overreact.”
This caption makes deflation out to be the bad guy (Deflation is coming! Deflation is coming!), and the Fed a hero with the superpowers to save it, or at least, “avoid” it. But it may in fact be the Fed’s incessent patching that instigates this boomerang economy. And after the Fed implements “quantitative easing,” or, artificially “buying financial assets to hold down long-term interest rates and increase the supply of money,” who knows what the next consequential threat will be.
Whatever it is, you can bet it will be a new bad guy sporting a new confusing name to match. The Fed attempts to ideologically isolate these threats from those that proceed them, but it’s all the same cycle in the end.
