He's one of the men who guide the financial course of the United States.

And Thursday, Michael H. Moskow, president of the Federal Reserve Bank of Chicago, was in Warsaw on a kind of information-gathering mission.

"We travel around - it's very important for us to do that, to get input from people in business, people in government, people in labor unions, people in community groups, as to what's happening in the economy," Moskow said Thursday morning in a conference room at Lake City Bank. "That's an extremely important part of what we do, gathering that ... anecdotal information."

The key to formulating monetary policy, he said, is making a forecast of the future, and part of that process includes finding out what people think is happening now and what they think will happen in the future.

Moskow came to Warsaw also because Michael Kubacki, president of Lake City Bank, is on the Federal Reserve Bank's board of directors, and Kubacki had told Moskow about Warsaw and its orthopedic industry.

The Federal Reserve Bank of Chicago is one of 12 banks in the federal reserve system. The Chicago Fed serves the Seventh Federal Reserve District, which includes all of Iowa and most of Illinois, Indiana, Michigan and Wisconsin. The Chicago Fed has a head office in Chicago, a branch office in Detroit, regional offices in Des Moines, Indianapolis and Milwaukee, and facilities in Peoria, Ill., and on the southwest side of Chicago.

Federal Reserve Banks supervise the nation's banks, distribute currency, take in unfit bills and substitute new currency and process paper checks and electronic funds transfers. The Fed charges for check and electronic fund processing, but does not charge for distributing currency.

As president and chief executive officer of the Chicago Fed, Moskow is a member of the Federal Open Market Committee, which watches over the U.S. economy and decides, for example, when to raise or lower interest rates.

The FOMC is made up of the 12 Reserve Bank presidents and seven members of the board of governors in Washington, D.C.

That committee, by statute, is required to set the monetary policy for the nation. The committee is chaired by Alan Greenspan, who is appointed by the president to chair the Federal Reserve Board, but who is elected chairman of the FOMC by its members.

Moskow said he believes the economic recovery in the Midwest is lagging behind the rest of the country, but that does not appear to be the case for Kosciusko County.

"In this part of Indiana, you're doing very well," he said. "Your unemployment rate is below the national average here, so that statement isn't going to have much meaning here."

In the recent recession, he said, the U.S. had a decline in employment of 2 percent. In the Midwest, that decline was 4 percent due to the region's dependence on manufacturing. Employment is growing again in the Midwest, he said, but not as quickly as in the rest of the country, though it will catch up.

Judging by financial reports he's read, he said, his guess is that orthopedic companies are more "recession resistant" that other forms of manufacturing.

"They seem to be less affected by the national recession and more affected by these overall trends in the economy," such as an aging baby-boomer population needing implants.

The national recession, he said, was a mild one, as was the recovery. But now, he added, "the recovery has really kicked into high gear, with over a million jobs created since the beginning of this year. So, the recovery, we feel, is sustainable," which is why interest rates were raised one-quarter percent in June and why they may continue to increase "at a measured pace."

Recent interest rates were drastically low, he said, and "we have to reduce this amount of accommodation, because if we don't, you're going to see very high inflation, which we don't want, and that would be very damaging to consumers, very damaging to business firms, very damaging to our overall economy."

If helping decide national monetary policy isn't enough, Moskow also is CEO of the Chicago Fed, which involves operating a 300-employee institution.

After Sept. 11, 2001, the Federal Reserve system was a priority. When there is a national crisis, he said, people can panic and withdraw their money from banks.

"Sept. 11 was a very tragic day for the nation," he said. "We had to keep the payment system operating that day. We gave out huge loans, record levels of loans that day, to banks to make sure that the payment system, the banking system, would keep operating during that period."

Since then, he said, the Federal Reserve system has revised its backup systems and has rigorously reviewed all of its processes to make sure there would be no disruption in service in case of another crisis, and has increased security in its systems and infrastructure.

After lunch with area bankers Thursday, Moskow toured Biomet Inc. before returning to Chicago. [[In-content Ad]]