The times, they are a-changin' at the stodgy old Federal Reserve. We used to think of it a financial temple from which a priestly caste of economic policy makers would periodically emerge to make oracular pronouncements of the sort depicted in the video of Fed chairman Alan Greenspan bantering with Ron Paul. Now the Fed plans to keep track of social media and the blogosphere to better understand how it's perceived.
[T]he Fed is now evaluating bids for a social media analysis system that will mine data from Facebook, Twitter, YouTube, blogs, and web forums--beginning in December. In order to "handle crisis situations" and "track reach and spread of […] messages and press releases," the project will also identify a number of what they call "key bloggers and influencers" to target with their outreach, and presumably monitoring, efforts.
You can interpret this move three ways:
- The Fed is acting exactly like you'd expect a bunch of PhD economists to: Treating the online opinion realm as a batch of data to be parsed and analyzed. It doesn't really want to know what people are saying about it. It just wants to turn it into a chart. No time to read! We're running the economy!
- The Fed is doing what it can to live up to the impression that it's a secretive, quasi-malevolent institution where sorcerer central bankers pull levers in darkness and cast their monetary spells over the macro-economy. A very appealing thesis for conspiracy theory paranoids.
- The Fed is legitimately trying to change its image. Or at least understand that it has one.
I'm leaning toward number three. Not because I don't think the Fed loves charts or isn't a den of warlocks in pinstripes (Kidding! And apologies to all the warlocks out there...) but because the Fed is clearly developing a PR strategy.
This began when Greenspan realized just how much attention people were paying to him. He milked it for all it was worth en route to becoming a sort of secular economic deity. More recently, Ben Bernanke decided to start giving press conferences. And then there was that whole nasty business with Gov. Rick Perry.
Perry took a shot a Bernanke on the campaign trail. He said that if Bernanke keeps "printing money" — which basically means buying more treasuries to pump more money into a demand-deficient economy, at a time when inflation is barely a blip — he would consider it treasonous, in an election year. The video is below:
So the Fed wants to know who thinks it has a secret agenda, who thinks it's doing the urgent work of American capitalism, and who hates its guts. It also worth noting that the Fed as an institution is dealing with internal dissent, which has captured the attention of the media.
To be quite honest, the Fed should learn a lot from Twitter, Facebook, and bloggers, at a time when these outlets are becoming the main places where people exchange information, get organized, and develop their own political and economic theories.
We eagerly await @ChairmanBen's first tweet.