Is the Federal Reserve on Twitter a Horrible Idea?
March 14, 2012 -- Even the farsighted Founding Fathers could not have foreseen this–the Fed is now on Twitter! Just think of the possibilities– one fine Friday any Fed functionary could foment a world crisis in 140 characters or less! It could be as simple as a typo.
For example, the Fed's second tweet was: "Watch a video of Chairman #Bernanke explaining the structure of the Federal Reserve. #fed #economy"
What if it accidentally read: "Watch a video of Chairman #Bernanke exploding the structure of the Federal Reserve. #fed #economy"
Or even worse, what if a disgruntled Fed employee tweeted: "New Fed figures fuel inflation fears–discount rate will be set at 11% next week"
Get the idea?
Perhaps it's a laudable thing that the Fed wants to move into the 21st century by means of instant communication through Twitter. But I wonder–does anyone really need a "cool Fed" or a "fab Fed?" Remember the famous "briefcase theory" during the tenure of Alan Greenspan? That theory held that if Greenspan left his house (on a day when the Open Market Committee was meeting) with a bulging briefcase, it was because the Chairman had armed himself with a battery of statistical reports and planned to argue a rate change. However, a slimmer briefcase indicated that the FOMC would leave rates alone (this was, of course, in pre-iPad times.) If people actually resorted to measuring the thickness of a briefcase for a sign of policy change, how long would it be before almost anything that was tweeted acquired major significance? After all, just a couple weeks ago the price of gold dropped by a whopping four percent, evidently because Chairman Bernanke made a comment about improving employment conditions. So, in a world where the images of the Virgin Mary regularly appear on tuna melts, it's a safe bet that someone somewhere will find Nostradamus-like predictions cleverly hidden in the verbiage of an otherwise banal tweet.
Moreover, why does the Fed feel the need to instantly communicate at all? Looking back, the only time that instant communication was really necessary was during the financial crisis of 2008. Therefore my conclusion is that the Fed opened a Twitter account because it is anticipating another even worse financial crisis in the very near future–must be, right? (See what I did there?)
