santow - do they walk on water; federal reserve chairmen and the fed (2009)

[...]... Once they were anointed with the title “Chairman,” their peers at the Fed were all distant seconds, thirds, and fourths when it came to how they were perceived The chairman was the king among kings Some might argue that the relationship between the chairman and the others was closer to that of the pope and the cardinals While they were in office, their expertise and honesty were almost never 6 DO THEY WALK. .. this reason and others, he concludes, Fed economic forecasts have been moderately accurate, at best Indeed, the Fed s economic projections are only a compilation of estimates from the regional Federal Reserve banks and from other members of the FOMC He reminds the reader that the primary objective of the Fed is not to get the economic forecast right, but rather to get monetary policy right Another insight... prowess and broad domestic and international vision as a professional economist, while at the same time setting his or her own political views on the sideline Do They Walk on Water? is rich with insights about Federal Reserve strategies, tactics, and behavior Here is just a sample Leonard Santow explains how, for all the riches of their data, monetary authorities do not possess perfect information There... Many seem to believe that the chairman of the Fed and the Federal Reserve are one and the same when it comes to monetary policy Yet, that is not the case There are other governors and district bank presidents who vote on monetary policy, and if enough of them feel strongly enough, they can influence the chairman’s thinking This may not show up in the official votes cast at Federal Open Market Committee... advantages from a personal point of view In contrast, the district Federal Reserve banks today have large research staffs, but it seems as though they spend too much time analyzing the national economy, and not enough time on regional considerations Not only does this approach create duplication of effort in studying the national economy, but it limits the benefits from having, so to speak, on- the- spot experts... point, the monetary union has held together because there have been economic advantages to breaking down economic and political barriers that appear to offset mistakes, misjudgments, and questionable approaches to monetary policy THE FEDERAL RESERVE When I was a graduate student and taught at the University of Illinois, the bible for studying the Federal Reserve was a book called The Federal Reserve. .. justice of the Supreme Court It was not that Federal Reserve chairmen had avoided criticism for their policies, but rather that the criticisms were usually done in a genteel manner Perhaps it was the respect for the office they held, their background, or the capabilities they exhibited in previous positions; but whatever the reasons, they were treated with kid-gloves This was especially evident when a Federal. .. determine cause and effect That is one of the reasons the SETTING THE STAGE 9 Fed has so many economists and staff people, and the conclusions they reach influence those they report to, such as the seven governors and twelve district bank presidents More often that not, what these economists and staff people say will have a noticeable impact on their bosses, who are responsible for making monetary policy... spending, and usually, they were against tax increases, even though these may not have been the right answers When it came to areas outside their bailiwick, they were preaching to the choir and tried to impress Congress with their knowledge and independence Consciously or not, they tried to come off as wise men, above and beyond any fray The image they tried to portray was that they could walk on water Once... public officials and how they conduct monetary policy There are recommendations throughout the book that, even if they are not adopted, should at least be talked about This is the fourth book I have written The first was on monetary policy, and the second was on the budget The third, in collaboration with my son Mark, an American history professor, is entitled Social Security and the Middle-Class Squeeze . D O T HEY W ALK ON W ATER ?