Central Bank Casting Call

   Another member of the Federal Reserve Board of Governors is leaving. This will leave the central bank's leaders four short of its full cast, and gives the president an even better opportunity to reshape the independent agency to his own economic views.
   Vice Chairman Stanley Fischer submitted his letter of resignation to the president, effective Oct. 1. Three other members have already left the seven-member Fed board, and the president has not nominated anyone to fill those vacancies.
   The Fed's prime directive is to control interest rates and unemployment. It does this by manipulating the supply of money available, which in turn affects interest rates and the willingness of firms to invest in production and expansion. This encourages hiring, thus keeping down the jobless rate and leading to a stable, growing economy.
   In the past, however, the Fed has countered administration expansion plans by raising interest rates in order to prevent a too-rapid expansion and its attendant runaway inflation.
   The current president has pushed for economic expansion of at least 3 percent and perhaps as much as 4 percent, but the Fed has insisted on maintaining a growth rate of about 2 percent.
   By replacing Fed governors with members more loyal to him, the president could weaken the Fed's independence and encourage more rapid economic growth, as measured by Gross Domestic Product (GDP), the total value of all goods and services produced in the country.
   But pushing for a rapid expansion often creates an economic bubble that quickly and suddenly bursts, sending the economy crashing into a severe depression, dragging the rest of the world down with it.
   The Federal Reserve is already three members short of its complement of seven, and Janet Yellen's term as chair of the Board of Governors expires next February. But even if the president does not nominate her for another term as chair, she would remain as a member of the board until 2024.
   Meanwhile, in the seven months since inauguration, the president has not nominated anyone to fill the current vacancies. All nominations to the board, including the chair, require Senate approval.
   Separately, the Fed released its latest Beige Book summary of the nation's economy, based on information collected primarily before Hurricane Harvey struck the Gulf Coast. 
    Overall, economic activity nationwide expanded at "a modest to moderate pace" across the country in July and August. The summary did not account for shutdowns in the energy and natural resources sector because of the hurricane. The storm "created broad disruptions to economic activity," the reported noted, but it's "too soon to tell the full extent of the impact."