Here's good news: At least one member of the Federal Open Market Committee has an adjustable-rate mortgage.

This makes me very glad, because I myself live under the threat of a similar mortgage time bomb. (For this reason, I tend to fret about inflation numerous times a day, agonizing about the potential wallop to my wallet.)

It gives me a modicum of comfort to know that at least one of the people who controls our nation's monetary policy also will be bopped in the billfold if rates get out of hand.

In my book, leaders who profess enlightened self-interest beat the cold-bloodedly disinterested every time.

There Oughta Be a Law

In fact, I think it would be a very good idea for the republic if Congress passed a law requiring all FOMC members (who are nonrenters) to be adjustable-rate mortgagees.

That way they'd hurt their own thumbs, not just yours and mine, when they turned the monetary screw.

Congress might also consider other lifestyle changes for the FOMC members, to keep them in touch with life's harsh realities -- because the long and the short of it is that they currently live in an unreal environment.

I cite their pay as an example. The worst-compensated members of the committee are the Fed governors, who make a $123,100 per annum regardless of the economy's performance.

You Could Manage

Granted, the cost of living here is pretty steep. But take it from me, with that kind of money you could find yourself a nice enough house, drive a pretty decent car, and still have money left over for riding lessons for any socially ambitious offspring.

Chairman Alan Greenspan, a bachelor, pulls in $133,600, which would put him in the trophy class in most of the city's singles bars.

As for the presidents of the 12 district banks, their incomes range from a low of $152,800 to $257,300

That's not quite in Ross Perot's league, but I think I can safely assume that they are nicely cushioned from the consequences of their own decisions.

I suggest that Congress pay all FOMC members a base salary plus a bonus inversely related to the rate of inflation. That way, if they let inflation get out of hand, their salaries would go down and their mortgage payments would go up.

Congress should also shorten the terms of all FOMC members to five years, which is one better than President Clinton gets.

Currently, Fed presidents are in for just about as long as they want. And Fed governors are appointed for 14 years. In an age when your average worker can't count on a steady job for the next 14 months, a 14-year guarantee of employment seems a tad extreme.

Five Years and Out

If I had a job like that, with no threat of a layoff and no performance reviews, I might be tempted to coast for a year or two (and I have suspicions that some present and past governors have succumbed to similar temptation).

Five years is plenty of time for a board member to make his or her mark and then move on to that high-paying post at the credit card company or trade group. It's also about the time most of them get the itch to move on anyway.

The terms could be staggered to reduce the chance of a President's stuffing the boards with members of any one economic ideology.

A Little Diversity, Please

My final suggestion is to open up the FOMC to a broader constituency.

Times are a-changin'. Minorities and females have a louder voice in the republic's affairs. Financial experts hail from many more sectors of the economy than they did back in 1913, when the Fed was created.

In this light, the FOMC's current monotone seems quaint.

Fed Governor Susan Phillips told bankers bankers last week that to succeed in the future they'll have to keep up with demographic changes. The FOMC might heed that advice.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.