My article about Jeffrey Lacker on Wednesday mentions that he is the third member of the Federal Reserve’s Open Market Committee to dissent at least eight times in a single year.
So who were the other two?
One instance is quite recent. In 2010, Thomas M. Hoenig, then president of the Federal Reserve Bank of Kansas City, dissented at eight straight meetings. His reasons were similar to Mr. Lacker’s – concern that the aggressive efforts to stimulate the economy would undermine the stability of financial markets and loosen the Fed’s control of inflation.
Mr. Hoenig gave an interesting defense of dissenting, whatever the reasons, in a speech early the year after.
“A deliberative body does not gain credibility by concealing dissent when decision making is most difficult,” he said. “In fact, credibility is sacrificed as those on the outside realize that unanimity – difficult in any environment – simply may not be a reasonable expectation when the path ahead is the most confounding.”
The other instance dates back to 1980, when Henry C. Wallich, a Fed governor, dissented nine times because he felt that the central bank under Chairman Paul Volcker was not moving fast enough to bring inflation under control.
“Like burglary, inflation is an extralegal form of redistribution,” Mr. Wallich once wrote, according to his obituary. ”Unfortunately, many economists share with politicians the habit of always regarding inflation as the lesser of any alternative evils.”
He did not, however, dissent at every meeting that year. And according to William Greider’s “Secrets of the Temple,” he did not share Mr. Hoenig’s sense of purpose.
“It is not a pleasant thing to have to keep dissenting,” he quotes Mr. Wallich as saying. “It makes one quite useless. To be a constant dissenter is a fruitless thing.”
Article source: http://economix.blogs.nytimes.com/2013/01/09/the-great-dissenters/?partner=rss&emc=rss
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