Former Federal Reserve Chairman Ben Bernanke won the 2022 Nobel Prize in Economics for his groundbreaking work on the Great Depression. His book, "The Great Contraction," outlines how the Depression could have been "merely a severe downturn" had the proper moves been made by the Fed and the Treasury. 

Bernanke's key financial moves focused on managing gold reserves, utilizing the Fed's balance sheet, and prioritizing small businesses over corporations to mitigate the severity of the crisis. On the preventative side, Bernanke stressed the need for consistent communication of Fed policy and goals. 

Communication, according to Bernanke in his book, is the key to enabling businesses to plan for future Fed activity. By providing a steady, balanced flow of information, the Fed could achieve its dual mandate of price stability and strong employment in a less volatile manner. To this end, Bernanke started in 2011 the practice of holding press conferences at half of the Fed's eight meetings during the year. It was understood that only at the four press conference meetings would the Fed change policy on matters such as interest rates or the Fed balance sheet. 

Seven years later, in July 2018, Jerome Powell took Bernanke's policy and broadened it to holding news conferences after every meeting. This has so far added to volatility, as Powell is not bashful about contradicting market pricing. Such an example of this was last Wednesday when Powell said," Don't count on a rate decrease at the December meeting." Rather than stabilize the markets, his words disrupted them. The Fed Funds futures markets had priced in a 90 percent probability of a rate cut in December. That dropped to under 50 percent immediately.

Within seconds of Powell's comments, expectations of low interest rates vanished. So did the effervescence of the stock market. The man who sets the rates just told the markets they were wrong. And they were punished. But to what end? Were businesses better off with that abruptness? And in the absence of complete data, given the Government shutdown, how could Powell come to such a conclusion? Recent inflation data, ex food and energy, was calmer than expected in August. Consumer expectations of future conditions are at recession levels, according to the University of Michigan's latest survey. Job growth is anemic, according to the Labor Department's data from last summer. 

What was the point?