Why Has the Federal Reserve Launched a Facebook Page and What Does It Mean?
By Ryan McMaken
The Board of Governors of the Federal Reserve system launched a new Facebook page last week, and UPI reports that the fed's pronouncements on the new page were not met with universal approval:
The page has gained more than 13,000 likes but has been flooded with critical and sarcastic comments, starting from its very first post.
"Can you guys please help me get some of that QE? I'm trying to buy 16 cars, 4 houses, 2 jets and a yacht," one commenter wrote. "I swear it will stimulate the economy. I'll spend it all and cycle it back. I know velocity needs to pick up so I'll make sure to pay lots of models to live in my houses and travel with me. Thanks Fed! You are such a moral and upstanding institution!"
Indeed, a quick visit to the page reveals more or less non-stop attacks on the Fed with each new post. The Fed has it's defenders on the page, as well.
It is interesting to consider, however, how the Fed feels it is even constructive or necessary to engage the public through social media. As little as ten years ago, it would be extremely difficult to imagine the Fed even bothering to address the public at all. At that time, the Fed happily remained hidden from public views, and the only scrutiny came from commentators in the financial sector. Most of those, generally gushed over what an excellent job the Fed was doing.
Of course, during the time of Alan Greenspan, the Fed earned nearly universal praise among mainstream economics faculty, with some even declaring that the business cycle might even be abolished with careful leadership — such as Greenspan's — at the central bank. Bob Woodward declared Greenspan to be "the Maestro" in his 2000 book.
In his Presidential run in 2008, however, Ron Paul became the first national figure in decades to gain traction in questioning whether or not the Fed was all it was cracked up to be. Paul even suggested that the Fed might best be abolished.
What followed was several years of declining legitimacy for the Fed as a growing number of people began to understand what a central bank is, and what it does — and as the US went through the worst recession in decades. The public began to understand also that the Fed functions primarily out of the public eye — and without any meaningful accountability — while making decisions that can have an enormous effect on public policy and the economy.
By March 2011, the Fed capitulated and began to hold regular press conferences for the first time in its history. According to the Fed's press release at the time: "The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve's monetary policy communication. The Federal Reserve will continue to review its communications practices in the interest of ensuring accountability and increasing public understanding."
The Fed says that sort of thing because it has to, but it would obviously engage the public as little as possible, if it had the choice. After all, if it did want to engage the public, it could have introduced press conferencesdecades ago. It's not as if the White house just started doing press conferences a few years ago, and now the Fed has decided to give this new-fangled thing a try.
This latest move into social media further shows the Fed recognizes that it must engage in damage control and expand what it calls "monetary policy communication."
Of course, just because the Fed now engages in direct communications with the public doesn't mean it's providing an accurate view of what the Fed does or why it does it.