Federal Reserve

Mondo Visione  2 hrs ago  Comment 
U.S. Secretary of the Treasury Jacob J. Lew today convened a meeting of the Financial Stability Oversight Council (Council) in an executive session at the Treasury Department.   During the meeting, the Council received an update on recent...
Motley Fool  Jul 17  Comment 
Author Roger Lowenstein explains why he gives the Fed a "B" for its performance over the past century.
Motley Fool  Jul 16  Comment 
As Roger Lowenstein, author of "America's Bank," explains, the powerful and focused Fed we know today is a far cry from the decentralized central bank we started out with a century ago.
Motley Fool  Jul 16  Comment 
The Federal Reserve was founded hundreds of years after most other countries had established their own central banks.
The Economic Times  Jul 15  Comment 
If the euro or China's yuan did become the world's reserve currency, said the 42-year-old Kashkari, it could be a positive development for the US.
Motley Fool  Jul 15  Comment 
A leading author explains the role that the Fed plays in the United States economy.
Yahoo  Jul 15  Comment 
The Dow Industrials (^DJI) and S&P 500 (^GSPC) are both up close to 9% since that time, while the Russell 2000 (^RUT) has enjoyed a run of 10.9% higher. Most importantly, small caps have been leading the charge, and the reverse head and shoulders...
Clusterstock  Jul 15  Comment 
The S&P 500 this week jumped to new highs, leaping above the median Wall Street year-end target of 2,152. Naturally, there were expectations that strategists would begin to raise their targets. But in a note on Friday, BMO chief investment...
newratings.com  Jul 15  Comment 
WASHINGTON (dpa-AFX) - After reporting a pullback in U.S. industrial production in the previous month, the Federal Reserve released a report on Friday showing that production rebounded by more than anticipated in the month of June. The report...


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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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