Ben Bernanke and the U.S. Federal Reserve Board have stated that it was their desire to become more “Transparent” in their communications with the public. This was to be in contrast to the cryptic language preferred by Bernanke’s predecessor Alan Greenspan.
The accompanying chart indicates that the Fed is talking more (as evidenced by the word count of the Federal Open Market Committee post meeting statements). However, judging by the market’s total confusion over “Tapering” the rate of QE3, or money-printing, more words apparently don’t equate with more clarity.
While it is laudable for the Fed to attempt to be more transparent, the Fed is finding it tough, especially when claims that the economic data is forcing it to back down from their plans to “Taper.” Instead, of making pithy and concise comments, we get mealy-mouthed statements containing wordy and tortured rationales.
Well, on the bright side, this may be a new Fed “indicator.” When the Fed feels that it needs more words to explain things, it may be an indication that they feel a need to defend a continuation of their massive liquidity experiment that has been in place for over five years now.
Using that guidepost, I suppose we can expect more liquidity and generally increasing prices for riskier assets.
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