Bernanke is back and blogging

Bernanke, who helmed the U.S. central bank for eight years and masterminded its efforts to respond to the recession, is also adjusting quickly to a new part of his career in which he is free to weigh in on whatever is on his mind without moving global financial markets. But he still must be cautious about creating difficulties for his successor, Janet Yellen. 

When Bernanke was chairman, he had to choose his language carefully, knowing that everything he said would be parsed by investors looking for hints of the Fed’s plans.

“Now that I’m a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers,” Bernanke wrote in his first blog post, published Monday.

In his first posts, Bernanke defended the Fed’s efforts to stimulate the economy by lowering interest rates against the charge that doing so hurt savers, challenged Harvard professor Larry Summers’ “secular stagnation” hypothesis, and revisited his mid-2000s analysis concluding that there was a “global savings glut.”

In writing on those topics, the former Princeton professor has ventured near the big questions facing his successor Yellen, who was his vice chairwoman before Bernanke left and who now is the most influential person in global financial markets.

Bernanke faces no restrictions on what he can say, meaning that he is primed to become a top economics commentator at his current pace of writing.

The Fed has specific and detailed rules about what current officials can say to manage its monetary policy communications. Bernanke, however, is under no restrictions that any other former executive branch official wouldn’t be held to, a Federal Reserve representative said.

D.J. Nordquist, a representative for Brookings, said Bernanke has not coordinated with the Fed regarding his blog. The feedback for his first few posts, Nordquist said, has been “extremely positive,” and they have been viewed in the hundreds of thousands of times.

Bernanke also joined Twitter, accumulating more than 26,000 followers through Thursday after unlocking his account Monday.

In writing about economic trends that could affect the Fed’s decisionmaking, Bernanke “absolutely” runs the risk of becoming a “shadow chairman,” said Peter Conti-Brown, an academic fellow at Stanford Law School and expert in the structure and history of the Fed. 

“The way Bernanke is likely to navigate that tension is to keep his discussion of economic trends descriptive, not prescriptive,” Conti-Brown explained, noting that past former Fed chairs have been forthright about commenting on Fed affairs.

Carola Conces Binder, an economist who has researched public perceptions of monetary policy and who maintains her own blog, downplayed the risk that Bernanke could cause confusion about the extent to which his opinions reflect thinking at the Yellen Fed.

“I think it is good to have a former Fed chair participating in a forum like a blog, which is freely available to the public and fosters debate,” Binder said.

Other former Federal Reserve chairmen, she noted, have not only written for the public, they also have advocated specific legislation or rules.

Paul Volcker, who helmed the Fed from 1979-87, went into investment banking and later weighed in on public policy, including by being an adviser to President Obama in the early days of his presidency. One of the key measures included in the 2010 Dodd-Frank financial reform law, a rule limiting speculative activities by banks using insured deposits, was named the Volcker Rule because of his influence.

Alan Greenspan, who succeeded Volcker and gave way to Bernanke, went into consulting and published two books in his post-Fed career (Bernanke also plans to publish a book on his Fed tenure).

But neither has used the medium of the blog or social media the way Bernanke is now. Both of those venues can be influential in shaping opinion and research at the academic and policy levels.

“As a blogger myself, I think it will be very fun to have Bernanke in the blogosphere and to follow him on Twitter,” Binder said.

Nevertheless, Bernanke has steered clear of directly weighing in on the policy choices facing Yellen since she took over in February 2014.

Asked about the Fed’s widely anticipated move to raise interest rates this year at an event early in March, Bernanke curtly responded, “I’m not going to comment on monetary policy.”