Different takes on the same message
Federal Reserve Chairman Ben Bernanke sent a pointed message to emerging markets economies in a speech to the International Monetary Fund in Japan this weekend.
It was especially interesting to see how various news outlets decided to cover his remarks. From the Wall Street Journal:
Federal Reserve Chairman Ben Bernanke encouraged policy makers in developing economies to let their currencies appreciate, delivering a strongly worded counterargument to their own critiques of the Fed.
Many central bankers in developing economies have complained that the Fed’s easy money policies are hurting U.S. trading partners around the world. One common refrain is that when the Fed prints money, it causes investors to search for other places to put their money, causing a potentially destabilizing rush of funds into less developed economies. The critics say this fuels inflation and asset bubbles in their countries, and threatens to push their currencies higher to levels that would curb their exports.
Mr. Bernanke, in remarks prepared for a panel discussion at International Monetary Fund meetings in Tokyo, said policy makers in these countries could slow this rush of capital and some of its negative effects by allowing their own currencies to appreciate. Instead, he argued, they were doing just the opposite.
From the Reuters story:
Mr. Bernanke has often defended Fed actions against domestic critics, who argue the policy of keeping interest rates near zero while ramping up asset purchases hurts savers and risks future inflation.
But in a speech here, he addressed critics abroad by saying that stronger growth in the United States bolsters global prospects as well, countering the likes of Guido Mantega, the Brazilian finance minister, who has labeled the Fed’s latest stimulus effort “selfish.”
Critics say the Fed’s unorthodox policies weaken the dollar and bolster the currencies of developing countries, hurting their ability to export.
And from the Bloomberg Businessweek story:
Federal Reserve Chairman Ben S. Bernanke tried to refute arguments the U.S. central bank’s record stimulus is causing destabilizing flows of capital to emerging-market economies.
“It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” Bernanke said today in prepared remarks for a seminar in Tokyo on the last day of International Monetary Fund annual meetings.
His comments contrasted with those of IMF Managing Director Christine Lagarde, who told the same audience that such easing is likely to cause large and volatile flows that risk leading to “overheating, asset-price bubbles and the build-up of financial imbalances” in emerging economies, even as she applauded Fed efforts to boost growth.
It really does take reading all the different takes to get the full picture of what he’s trying to say and the arguments against the Fed’s current monetary policy. There’s global inflation, which you get from the WSJ story, the comments from Lagarde in the Bloomberg piece and the Brazilian finance minister’s remarks in the Reuters story.
These different takes are an important reason why having competition in the business press is so important. The reporters and editors making the coverage decisions rightly prioritize various parts of the remarks.
I bring this up as the state of the business press, like all journalism, is in flux. On one hand there’s the introduction of Quartz, which is good for everyone. Another outlet focusing exclusively on business can only mean others will have to step up their toes.
On the other hand, there’s the potential that the Financial Times will be sold – possibly to either Bloomberg or Reuters. Possibly combining two global financial journalism brands and once again diminishing the competition, which means another distinct viewpoint may be lost.
But it’s clear, we need all the perspective we can get.