PAUL A. VOLCKER
Structurally, the Federal Reserve is a very peculiar organization. Designed for public purposes, it retains some private participation; while policy needs to be uniform around the country, the formulation has important regional elements. There is nothing else in government quite like it. It has a chairman, but he is only one member of a seven-person Board of Governors in Washington. The System also has twelve Federal Reserve Banks with an unusual appointment process for presidents, which many people never understand even when you explain it to them.
All these officials have some legal responsibility for policy; aided and abetted by highly professional staffs, they all have some desire to influence policy. And they do, but in a very complicated process that you must be a part of to truly understand. In the end, however, the various views must be assimilated and reduced to directives to some person who has to implement a single policy in a way that affects the whole country. The policy is carried out in quite measurable, concrete ways, typically by buying or selling securities, or buying or selling foreign exchange in the market.
The decision to buy or sell so many securities on a particular day at a particular time in response to the policy directive is the responsibility of the manager of the Federal Open Market discount window. That decision may sound straightforward and rather mechanical. Making and implementing those decisions, however, requires enormous skill. Not only must one fully understand the mechanics and nuances of the market, one must be able to maintain relationships of mutual confidence with the people who view themselves as policymakers. I assure you that (at least from my unique and totally unbiased point of view) it was very easy when I was chairman of the Board! But when Arthur Burns was chairman, and one of the editors of this volume, Dewey