Monetary Policy

08.10.12

Obama's Unreliable Nominees

Scott Sumner asks a simple but important question: Why have Obama's own nominees to the Federal Reserve Board been so unreliable as advocates for monetary stimulus?

But what I don’t see many people discussing is the curious position of the Obama appointees to the Fed.  Not one member of the Board of Governors voted for monetary stimulus at the August meeting.  And Obama appointed 6 of the 7 board members.  Perhaps one could make excuses for the two Republicans that Obama picked.  But the Dems?  Not a single vote?  This is a real puzzle that needs to be explained.  I suppose some will argue that they’ve been absorbed into the “FedBorg.”  But that explanation won’t wash, as it doesn’t explain all the regional presidents loudly calling for more aggressive monetary stimulus.  There was one dissent (for tighter money) and last year there were often 3 or 4 dissents, in both directions.

I don’t have an answer, but I’ll say this:  Obama will probably be re-elected. But if he loses there will be precisely 6 reasons for his loss.  No more, no less.