The Federal Reserve had to be creative in following Walter Bagehot’s dictum for financial crises: “lend freely, at a high rate, on good collateral”. It is unlikely that Bagehot would have approved of this:
There is a definite trend in communications by Fed chairman Ben Bernanke: more and more people are being allowed to ask him questions.
- On November 5th, he answered questions from economics students at Jacksonville University
- On November 30th, he answered questions from business leaders in Columbus, Ohio
- Now on Sunday Dec 5th, he will be interviewed on CBS’s 60 Minutes, answering questions on unemployment, deficits and QE.
Jean-Claude Trichet, ECB president, has been here before. Early in his life as governor of the Bank of France in 1993, Mr Trichet faced down a tidal wave of market pressure and prevented the franc from being devalued.