The Fed's Mr. Dove.

Long-time admirers of Donald Kohn, the recently appointed Vice Chair of the Federal Reserve, find themselves somewhat perplexed, Earlier this year the normally savvy former Fed staff member and Greenspan confidante took the surprising position of stating that the U.S. economy is likely immune to any inflationary effects from rising energy prices. Since then, Kohn has been tagged by the markets as the leader of a staff-driven hyper-dovish wing of the FOMC. All of this has unfolded even as new Chairman Ben Bernanke has worked aggressively to establish his credibility as an inflation fighter, specially citing the pass-through dangers of rising energy prices on inflationary expectations.

Many of Kohn's admirers worry that by charting a course so independent of the Chairman he is potentially heading down a perilous path that has hurt the credibility of some past vice chairmen. For example, in the 1990s, highly respected former Vice Chairman Alan Blinder found himself at policy odds with Chairman GreensPan after being perceived as taking a particularly dovish tone at the Fed's annual conference in Jackson Hole, Wyoming. Blinder never fully recovered his footing within the Greenspan-dominated institution. Today Kohn is said to find himself with divided loyalties--to the office of the Chairman but also to the Fed's professional staff on which he once served.