Federal Reserve

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Mondo Visione  14 min ago  Comment 
Today, SIFMA issued the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO on the Federal Reserve’s announcement to extend the Volcker Rule conformance period through July 2017 for covered funds: "We welcome the...
Yahoo  4 hrs ago  Comment 
Asian shares enjoyed their best day in 15 months on Friday, after Wall Street boasted its biggest two-day advance since late 2011 amid relief the Federal Reserve was in no rush to withdraw stimulus from ...
The Hindu Business Line  2 hrs ago  Comment 
WA Business News  8 hrs ago  Comment 
The Australian dollar has followed metal prices and Wall Street higher, bouncing from the record lows it reached after the US Federal Reserve meeting.
BBC News  9 hrs ago  Comment 
The US Federal Reserve gives Wall Street banks even more time to comply with parts of the Volcker Rule, a key part of the reforms introduced by Congress following the financial crisis.
Bloomberg  10 hrs ago  Comment 
Yellen’s Patience Echoes Greenspan 2004 Run-Up to Rate Liftoff Federal Reserve Chair Janet Yellen is taking a page from predecessor Alan Greenspan’s 2004 playbook, a...
TheStreet.com  11 hrs ago  Comment 
NEW YORK (TheStreet) -- The S&P 500 continued Wednesday's gains, up 1.6% Thursday. The move higher has caused the volatility index to collapse, according to Jon Najarian, co-founder of optionmonster.com and trademonster.com.  The CBOE...
Clusterstock  11 hrs ago  Comment 
"Disinflation." As oil prices have cratered over the last several months, they've taken inflation down, too.  But the decline in prices isn't being talked about a outright deflation — or falling prices — but disinflation, meaning slowing...
Wall Street Journal  Dec 18  Comment 
The dollar rose against other major currencies Thursday, as investors were encouraged by the Federal Reserve’s latest comments.




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The Federal Reserve is the third central bank of the USA. It was legally established on December 23, 1913, when US president Woodrow Wilson signed the Federal Reserve System Act. The Federal Reserve was blamed to have deepened the Great Depression after the crash of 1929. In a panicky reaction it then deflated money supply, causing a lasting and deep economic contraction.

In the inflationary period from 1973 - caused by the first oil shock - to 1981 chairman Paul Volcker managed to battle inflation successfully by raising the leading interest rate to more than 20%. At the same time Volcker succeeded in keeping the economy out of a drawn-out recession.

The policy style changed with the nomination of Alan Greenspan in 1987. Only 2 months into office Greenspan was confronted with the Black Monday of 1987, when the Dow Jones Industrials Average fell 22%, its biggest loss ever in a day. Remembering the fatal results of tight liqudity after the crash of 1929 Greenspan offered banks all the funds they needed in order to avoid a meltdown of the stock market. Alan Greenspan can also be credited with blowing up the biggest debt bubble of all times in the new millennium. By lowering the Fed Funds rate to a record low of 1% the Federal Reserve contributed heavily to the American housing boom that turned out to be a bubble based on easy credit. Greenspan conceded in 2008 to Congress that he erred on wrong side when the Federal Reserve thought that the financial industry should not be burdened with more oversight. At this time the USA had fallen in the biggest financial crisis ever.

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The Federal Reserve Banks

The 12 Federal Reserve Banks were established by Congress as the operating arms of the nation's central banking system. Many of the services provided to depository institutions and the federal government by this network of Reserve Banks are similar to services provided by commercial banks and thrift institutions to business customers and individuals.

Reserve Banks

  • hold the cash reserves of depository institutions and make loans to them
  • move currency and coin into and out of circulation, and collect and process millions of checks each day
  • provide checking accounts for the Treasury, issue and redeem government securities, and act in other ways as fiscal agent for the U.S. government
  • supervise and examine commercial banks that are members of the Federal Reserve System for safety and soundness
  • participate in the activity that is the primary responsibility of the Federal Reserve System, the setting of monetary policy.
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