JG: Chairman Bernanke would deny that political pressure influences his vote, and he even went out of his way to make a public appearance in Texas after Rick Perry made his threat. But FOMC members all read the papers. They see the virulent opposition to their policies on the right and the silence on the left. (Paul Krugman is a big exception, but he is not a politician.)
Forget the median economist theory of the fed. Its power is granted by congress, a club for politicians, not economists. And so it makes sense to avoid the ugly mess of legislating change by stocking the fed board (fedborg) with people who are sensitive to political pressure:
They want to avoid any Congressional action that would reduce their independence in the future, in part because they think this might lead to even worse economic outcomes than we are currently experiencing.
And this is also relevant:
JG: I think the average economist outside the Fed thinks the Fed has less ammo than the average economist inside the Fed.
Addendum: here Krugman on on the fedborg idea and a summary here:
In a lengthy column to be published in this week’s New York Times Magazine, Paul Krugman compares the Federal Reserve to a Borg—a race of beings from Star Trek that act based on the wishes of a hive mind, and present major threats to the Starfleet and the Federation.
Krugman argues that Fed Chairman Ben Bernanke has succumbed to this Borg mentality, subduing the beliefs he espoused during his career as an academic.