Union dues

Federal Reserve Chairman Ben Bernanke regularly seeks to allay concerns about the possibly inflationary impact of the massive increase in the monetary base and related increase in the money supply that he has engineered. In a recent Wall Street Journal column, for example, he laid out the technical means by which the Federal Reserve would .what it has done.
“At some point,” Bernanke explained, “as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road. The Federal Open Market Committee, which is responsible for setting U.S. monetary policy, has devoted considerable time to issues relating to an exit strategy.” Bernanke declared: “We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner.”
How will he know when the time comes? Bernanke implied that the time lies in the relatively distant future: “My colleagues and I believe that accommodative policies will likely be warranted for an extended period.” Unfortunately, Chairman Bernanke otherwise left that particular subject for another day.
When the time comes, will the Fed resist political pressures to keep the pump primed? The Obama administration has presented us with some cause for concern on this score. The multitrillion dollar budget deficits it has forecast for the next ten years may themselves result in the extension of “accommodative policies” by the Fed. They will certainly create pressure on the Fed to monetize the debt.
One would like to believe that the Fed will reverse its present policies when objective economic criteria indicate that monetary policy should be tightened. Yet something other than economic expertise seems to be the order of the day.
President Obama has just appointed New York State AFL-CIO President Denis Hughes the president [correction: chairman] of the New York Fed. “Completing the move away from having people from the financial world lead the New York Fed board of directors,” Neil Irwin reported in the Washington Post, “Lee C. Bollinger, the president of Columbia University, was named deputy chairman on Monday.” Bollinger is of course the famous defendant in the University of Michigan affirmative action cases that went to the Supreme Court and, most recently, the host of Mahmoud Ahmadinejad.
Irwin went out of his way to downplay cause for concern in the appointment of Hughes to the chairmanship of the New York Fed:

The board of directors of the regional Federal Reserve banks serves mainly an advisory role, sharing with bank presidents its views of economic conditions and business trends. The directors have no role in setting monetary policy or determining how banks are regulated, though they select the president of the bank, who does have those powers, subject to approval by the Fed board of governors in Washington.

Why is Obama appointing a union boss to this position? What exactly does he bring to the table? That is an interesting question that Irwin somehow fails to address in his remarkably unenlightening article.
CORRECTION: A commenter points out I have a key point wrong: “Hughes was named Chairman of the Board of Directors of the NY Fed. The President of the NY Fed (William C. Dudley – appointed to succeed Geithner), not the Chairman, is a permanent member of the FOMC.” I regret the error.

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