Wednesday’s Fed meeting, above all, drove home one message: economics and finance are more publicized, yet less understood than ever. In the run up to the decision, the media were all over the issue, spilling black ink by the gallons on front pages, op-eds and headlines. It wasn’t just the Financial Times and Wall Street Journal either – literally every single news publication chimed in, big or small, tabloid or broadsheet, independent or conglomerate-owned. The fact that they were able to create so much excitement is remarkable. It’s the result of journalists’ tireless efforts over the past five years to turn a formerly dull subject into a real crowd-pleaser. There have been previous instances where central bankers enjoyed public attention. Paul Volcker during his inflation-fighting spell at the Fed in the early 80s, Alan Greenspan and the “New Normal” of loose monetary policy around the turn of the millennium. But the explosion of interest since the crisis is unprecedented – not only in reference to central banks but to the topic of economics and finance in general.
So the media have done a good job. They’ve popularized complex subject matter by inventing a plethora of catchy neologisms such as the “Dectaper” that was decided at Wednesday’s Fed meeting. They’ve also elevated central bankers to the status of semi-Gods (aka “Lords of Finance”), hanging on their every word and reading their meeting minutes as if they were tea leaves. Still, the verdict after five years is rather sobering: the mainstream media has failed in its balancing act. It managed to make finance more tangible, mainly by personalizing it, but the public is not necessarily better informed (and sympathetic). The fact of the matter is that monetary policy and its various instruments – QE, QQE, LTRO, Operation Twist, forward guidance etc. – just don’t lend themselves very well to sensationalist statements. It’s much easier to talk about “Helicopter Ben” and “Super Mario” instead. It’s also much easier to pounce on scandal and the excesses of Wall Street. The insider probe against SAC Capital, the legendary and highly successful hedge fund, is a case in point. The reports of the inner workings of SAC, the revelations of a veritable network of market cheating that included other firms, the methodical way in which non-public information was gathered and the money involved make a mesmerizing story. And if you care to take a look at the phone transcripts and witness testimonies you’ll note that they make a great read, too. In short, this stuff is truly exciting. The same can’t be said of the latest ECB meeting minutes, which are mostly an exercise in semantic hair-splitting.
The reality of the post-2008 world is that economic policy and finance set the global agenda and hence the public discourse. From the media’s perspective that’s a challenge because the subject matter is difficult to convey and has already been dominant for a long time. So what emerged is a bifurcated approach to financial reporting: the high-brow aspects of the news, such as monetary and economic policy, have been made palatable to a wider audience by way of personalization and catchy reporting. It scratches the surface but doesn’t touch on the nitty-gritty. That’s left to the FTs and WSJs of this world. To raise interest from the grass-roots, finance reporting is complemented with meaty details of scandal and excess. There’s enough of it, for sure, but I think it’s fair to say that it sometimes obscures the relevance of more pertinent issues that are less simple to communicate. In fact, it’s very likely to be counterproductive. The focus on scandal turns people on but off when it comes to the more boring aspects of finance, which are those that actually affect them in the long term.