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Posted at 10:52 AM ET, 02/18/2011

What's on Bernanke's mind? A 'word cloud' analysis of the Fed chairman's recent speeches

By Ariana Eunjung Cha

Ben S. Bernanke is known for being cautious with his words. Unlike his predecessor Alan Greenspan -- whose positive statements and insinuation of pessimism about interest rates or the economy regularly moved markets -- some say Bernanke's public remarks have often been harder to read.

In 2010, Bernanke gave 26 speeches, and in 2011, he's given two so far. Each event has been scrutinized by everyone from Wall Street CEOs to pensioners for any indication of a change in policy. Here's a graphical representation of what was on Bernanke's mind at a particular time. These "word clouds" for the Fed chair's speech Friday in Paris during the G-20 finance ministers meeting and the five most recent public appearances before that give greater prominence to words that appear more frequently in his speeches.

Feb. 18, 2011
Global Imbalances: Links to Economic and Financial Stability
At the Banque de France Financial Stability Review Launch Event, Paris, France
fed021811.jpg

Feb. 3, 2011
The Economic Outlook and Macroeconomic Policy
At the National Press Club, Washington, D.C.
fedword020311.JPG

Nov. 19, 2010
Emerging from the Crisis: Where Do We Stand?
At the Sixth European Central Bank Central Banking Conference, Frankfurt, Germany
fed111910.JPG

Nov. 19, 2010
Rebalancing the Global Recovery
At the Sixth European Central Bank Central Banking Conference, Frankfurt, Germany
fed1119102.JPG

Oct. 25, 2010
Welcoming Remarks
At the Federal Reserve System and Federal Deposit Insurance Corporation Conference on Mortgage Foreclosures and the Future of Housing, Arlington, Virginia
fed102510.JPG

Oct. 15, 2010
Monetary Policy Objectives and Tools in a Low-Inflation Environment
At the Revisiting Monetary Policy in a Low-Inflation Environment Conference, Federal Reserve Bank of Boston, Boston, Massachusetts
fed101510-1.jpg

By Ariana Eunjung Cha  | February 18, 2011; 10:52 AM ET
Categories:  Federal Reserve  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Economic agenda: Friday, Feb. 18, 2011
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Comments

The policies driving Federal Reserve actions and global trade are deeply embedded and not likely to change easily. The concept that the Federal Reserve can usefully manage employment and some measure of inflation is anchored in the core belief system of a large section of the professional economist community. Anyone sensitive to objective reality should understand that the Federal Reserve would never have needed to resort to its current extreme policies if its basic policy framework actually worked. But, there is no alternative that anyone understands. So the only thing Bernanke knows how to do is to blow more smoke and hope that somehow the problems will take care of themselves. The story with free trade is the same. Only in some fantasy land can we have both free trade and pegged currencies. The objective implication of large trade imbalances is that so called free trade does not work. But nobody is ready to protect our economy and our economy has become so dependent of unbalanced trade that adjustment to real fair trade would be very difficult.

Posted by: dnjake | February 18, 2011 1:02 PM | Report abuse

As new facts emerge, Ben incorporates them, much like Keynes. Fundamentally he wants to be a free market neoliberal but is recognizing the downsides. Most of the heat Obama suffers came from the neoliberal faith in the market to self correct. It takes time, you know. Instead things got worse. Like Keynes, Ben and Obama are not afraid to intervene, but the market did not self-correct, capital remained mal-distributed, no trickle down.

We started with a liquidity crisis, specifically triggered by Goldman's frequently failing securities, which cast doubt on all securities. The effects were compounded by leverage and the market makers focus on short term profits, using short term credit and complex risk protection. Everyone else was following the leaders because they were successful. Returning liquidity did not change the underlying philosophy.

Boosting lagging short term profits initiated local unemployment and foreign investment. Recently there appears a paper written in 2001 providing a real in-depth analysis of the wisdom of outsourcing, something the B-School consultants overlooked. It shares a commonality with short term financilization; negative long term effects. First to business in the form of outsourced profits, a jobless labor pool suffers from outsourced experience and then the community suffers an outsourced economic multiplier.

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