Coverage of central banks and monetary policy in popular financial media outlets like Bloomberg, Financial Times, Forbes, Wall Street Journal, and The Economist is almost uniformly bad. The reporting and analysis are superficial, and the writers tend to assume facts not in evidence. The same myths repeat themselves ad nauseam: the Fed’s vaunted “independence” must be kept sacrosanct; the obvious and proper purpose of monetary policy is monetary stimulus; Ph.D central bankers hold special technical knowledge which us average folks should not question; and that central bank decisions are wholly unpolitical.
These myths are used to prop up trite and superficial conclusions, always with the implication that “everyone knows” X, Y, and Z are true about central banking. But many times those conclusions are not true, or at least not widely agreed upon. And when they are reported as gospel truth, the financial press effectively become cheerleaders for the Fed. While they may call for tinkering with interest rates or replacing one Governor with another, the presumption that central banks are ever and always benevolent goes unchallenged.
For example, consider this recent article from Bloomberg fretting about “Austrians” taking over the Fed under a Trump administration:
“Trump’s characterization of the current economy as “false” suggests a sympathy for the Austrian school of economics, in which short-term monetary benefits are believed to come with longer-run costs. The “false” economy fosters asset price bubbles that pop and end in an even deeper recession than would otherwise be the case.
“A Fed packed with Austrian economists would likely react slowly to a recession and resist extraordinary policies such as quantitative easing. They would also likely attempt to tighten policy soon after the recession ended. They would, in other words, tend toward a liquidationist approach that risks turning the Great Recession into another Great Depression.”