Federal Reserve

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Bloomberg  1 hr ago  Comment 
Singapore Dollar Tumbles After Central Bank Shocks Market Singapore’s dollar tumbled after the Asian nation unexpectedly eased monetary policy, highlighting the divergence...
Bloomberg  1 hr ago  Comment 
Morgan Stanley Chief Executive Officer James Gorman found a taker for his bet on the U.S. Federal Reserve raising interest rates this year: his own economics team.
Clusterstock  1 hr ago  Comment 
The Federal Reserve is set to announce its latest monetary policy decision on Wednesday at 2:00 pm ET.  In a preview ahead of the Fed's announcement, Marc Chandler wrote that, "To the extent the FOMC meeting is ever routine, this should be...
Forbes  2 hrs ago  Comment 
The greenback reclaimed some of yesterday's sharp losses against a basket of currencies on Wednesday, as investor sentiment appears to believe the Federal Reserve will not make any major changes to its current policy. The Fed's monthly two-day...
Benzinga  4 hrs ago  Comment 
Chatter about weak energy being supportive and BOC policy ahead is still in focus. Wednesday's conclusion of the two-day FOMC meeting will likely keep traders active later in the day. No change is expected from the U.S. Federal Reserve. Chatter...
Yahoo  7 hrs ago  Comment 
Global stocks drifted Wednesday after weak earnings from several U.S. companies added to global growth concerns as investors waited for the U.S. Federal Reserve's latest statement on monetary policy. KEEPING ...
Wall Street Journal  Jan 28  Comment 
Stocks in Asia were mostly lower as investors awaited a U.S. Federal Reserve statement for clues on higher interest rates, while the Singapore dollar hit a 4 ½ year low after the central bank eased policy.
The Hindu Business Line  10 hrs ago  Comment 




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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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