Well that was something. On a day when there is already a strange hothouse atmosphere around the Federal Reserve's policy statement and chairman Ben Bernanke's afternoon news conference, there was a long, often tense exchange on CNBC between Rick Santelli, the network's sometimes-bombastic correspondent (recall that it was one of his rants that launched the tea party movement), and Jon Hilsenrath, chief economic correspondent at The Wall Street Journal.
The exchange was long and hard to summarize, and Santelli did most of the talking. But it boils down to Santelli giving Hilsenrath an earful about the reporter needing to give Bernanke and the Federal Reserve more holy hell about the nasty consequences of its easy money policies.
It strikes me that this reflects a big divide between people who spend all day in the trading pits or obsessing over the latest move in the Dow, oil futures, or the yen, and those who spend their day in the quieter business of analyzing macroeconomic trends. Call it the markets folks vs. the economics folks.
Markets people see abnormal movements in stocks, bonds, currencies and commodities as being caused by an exogenous force, with Bernanke playing an alternately vengeful and benevolent god who causes all sorts of distortions with his money-printing. Economics people (a camp in which I very much belong) look at monetary policy almost as an abstraction, having intellectual debates about monetary policy transmission channels and expectations effects and so on. We tend to assume that markets are pretty efficient and rational, and we are often naive about the realities of the trading pits. I have a pretty good grasp of what the Fed is trying to do, but I'm also confident I would lose my shirt if I tried to parlay that knowledge into a career as a currency or bond trader.
So Santelli sees a world in which mean old Bernanke is upsetting the natural order of things in ways that can only end in disaster, while Hilsenrath has a quite good grasp of the frameworks and internal logic of the policies the Fed has been pursuing (though he's a straight reporter, making it hard to tell whether he agrees with the Fed or not).
To Santelli and his brethren in finance, the Federal Reserve is causing all sorts of problems that directly affect the success or failure of their trades right now. Whereas economics people see the risks of the Fed's easy money policies as purely theoretical at this point: Maybe some asset markets are getting a little overheated, maybe there will be inflation down the road, and so on. Bernanke is a very smart man, and so are the most successful traders. But sit them in a room together, and they might have a surprisingly hard time understanding each other
(Disclosure: I have also appeared on CNBC, including Wednesday morning, and the same divide was on display as interviewers Kelly Evans and Simon Hobbs seemed taken aback by my assertion that the date the Fed begins tapering bond purchases doesn't really matter. Our exchange was rather less heated than that between Santelli and Hilsenrath, however!).