A Benjamin Cole post
In addition to the present two empty seats on the seven-member Federal Reserve Board, there will soon be two empty regional Federal Bank presidencies—happily enough, we are talking about the pending exits of Charles Plosser, Philadelphia, and Richard Fisher, Dallas.
Okay, it gets complicated, but the short story is that 11 non-NY regional bank presidents rotate on and off of four seats on the 12-member Federal Open Market Committee (FOMC), the body that makes U.S. monetary policy.
So who appoints the 12 Fed regional bank presidents? They are chosen by the nine-member regional boards of directors—but also subject to approval of the Federal Reserve Board itself. That’s important.
Market Monetarists, This Is Our Hour!
Together, the Fisher-Plosser replacements will have 4/11ths + 4/11ths of an FOMC vote, or 8/11ths. Moreover, all Fed regional presidents attend every FOMC meeting, and participate, thus becoming part of the consensus or mood.
Both Fisher and Plosser were anti-inflation hysterics, voting for tighter money even in the Great Recession, and sounding relentless klaxons of the inflationary Doomsday ahead.
Events have shown otherwise, to put it mildly.
The dynamically-wrong duo also were prominent media presences, and thus confused, if not actively undercut, forward guidance messages from the Fed.
If you are a Market Monetarist, or just want a more growth-oriented Fed, and live in the Dallas and Philadelphia areas, I encourage you to contact the boards of your local Fed regional bank, and send a friendly e-mail advising such.
Here is the contact info:
There are business journals in those two markets, the Philadelphia Business Journal and the Dallas Business Journal.
The local business journals (some of which I worked for, many moons ago) are very receptive of locally authored op-eds. If a Dallasian or Philadelphian wishes, I can write an op-ed for placement in the two business journals, under your name (edit as you see fit, of course).
And, all of us can send e-mails to the national Federal Reserve Board, or Janet Yellen, advising a signal be sent to Philadelphia and Dallas that only “responsible” candidates for appointment to regional bank presidencies will be approved. In English, “Do not send any more tight-money nuts to the FOMC.”
It is worth pondering that whoever replaces Fisher and Plosser earns a 4/11ths seat on the FOMC for five years—but since Fed regional bank presidents are routinely re-appointed by the local boards, that term can stretch out indefinitely. Fisher and Plosser both served 10 years.
That is a long time to listen to another tight-money hysteric, let alone to witness the damage that could be done to the real economy.