Questions tagged [federal-reserve]

Use only for questions that are directly related to the central bank of the United States, the "Fed". For example, US monetary policy, US money supply, US balance sheet, etc. Do not use for generic questions related to central banks, monetary policy or other, which are not directly related to the Fed. Use instead central-banking, monetary-policy, or related tags.

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Who controls money supply if the fed does not?

This whitepaper states (bold mine): According to the consensus view, the two leading culprits of inflation risk today are the fiscal deficit and the money supply. To illustrate, take this CNBC ...
DPM's user avatar
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-1 votes
2 answers
327 views

What amount of Quantitative Easing will cause hyperinflation?

You all know that Quantitative Easing shifts the LM and AD curves right, so I haven't taken the time to redraw this picture. What's the maximum amount of Quantitative Easing that the Federal Reserve ...
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2 votes
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How is the Corona $2 trilion stimulus package going to be financed?

Perhaps this is a simple question but as a non-US citizen I don't understand how the US government is going to finance the $2 trillion stimulus package to combat the economic damage due to the Corona ...
Yunus King's user avatar
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1 answer
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What does the Fed do with their profits?

As far as I understand the system the Fed prints money which it then uses to buy bonds. Bonds are basically statements of debt meaning that the Fed receives interest from the parties it has bought the ...
Philogy's user avatar
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1 answer
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Federal Reserve capital injections

What were the specific conditions that the Federal Reserve attached to the capital injections forced upon the major Wall St. banks during the Great Recession? How and why do they differ from normally ...
JourneyManDesigns's user avatar
-1 votes
1 answer
126 views

What process does a new bank go through to get its first central bank reserves?

Im trying to better understand how banks work and one of the first thing that confuses me is central bank reserves. Current understanding of central bank reserves: Central bank reserves never enter ...
troy beckett's user avatar
15 votes
2 answers
1k views

How do reserves move between the 12 federal reserve banks?

In single central banks systems (e.g. Bank of England) then the final ledger for electronic money transfer is the adjustment of reserve account balances. In the Federal Reserve System, there are 12 ...
Corvus's user avatar
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8 votes
2 answers
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How and when is M0 money created?

The Federal Reserve Coin and Currency Service Website describes their currency order process thus: The 7.2 billion notes included in the FY 2015 order reflect the Board’s estimate of net demand for ...
Kinnard Hockenhull's user avatar
8 votes
4 answers
270 views

Can absence of inflation be accounted for by a reconfigured class structure?

A previous and oft-heard question asked why no inflation results from the Fed pumping money into the economy. Are we simply seeing a methodical wage suppression, thus no official "inflation," while ...
Nelson Alexander's user avatar
6 votes
1 answer
142 views

What major monetary policy actions were taken during the Great Recession (2007-2009)?

What major monetary policy actions were taken during the Great Recession (2007-2009)? Quantitative easing and unconventional policy actions such as asset purchases and "forward guidance". I think I'm ...
Amy's user avatar
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5 votes
3 answers
861 views

Why do interest rates move together?

Why do interest rates (mortgage, LIBOR, Treasury yields, etc.) move together? What is the fundamental reason behind that? From my understanding, what drives it is the Federal Funds Rate, which is the ...
Victor's user avatar
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1 answer
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Do open market operations permanently increase the money supply?

Suppose the Fed buys 1000 dollars worth of T-Bills in the open market to try decrease interest rates and increase the money supply. It does this by printing money and electronically increasing the ...
SalahTheGoat's user avatar
3 votes
0 answers
52 views

Do Fed OMOs directly and immediately increase M1 or M2 if they buy treasuries from a member bank? And what proportion of OMOs does that constitute?

I commonly hear that when the Fed conducts open market operations, it is directly increasing the money supply by exchanging newly created electronic money for US treasuries. But in the case where the ...
Tim kinsella's user avatar
3 votes
1 answer
78 views

Why's Federal Reserve buying individual corporate bonds, when corporations have been selling them successfully?

On Jun 15 2020, the Federal Reserve is expanding its Secondary Market Corporate Credit Facility into corporate credit to now buy individual corporate bonds, on top of the exchange-traded funds it ...
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3 votes
2 answers
284 views

What does the Federal Reserve intend to do with bonds it has purchased under QE?

In New York Magazine's interview with investor Mike Burry (made famous by The Big Short), he claims Quantitative Easing has left the Federal Reserve with an extraordinarily high leverage ratio: ...
Evan O.'s user avatar
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2 votes
2 answers
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Federal Reserve Interest

Banks have higher interest rate for debts than deposits to make money but does the U.S. treasury have the same interest rate for loans and deposits?
Alius Gobez's user avatar
2 votes
1 answer
455 views

Is there any scientific proof that 2%-3% target inflation rate is ideal?

There are a couple of central banks (RBA, Federal reserve for example) that use inflation rate as a key indicator to regulate their official cash rates. Those target inflation rates usually range ...
TelKitty's user avatar
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2 votes
1 answer
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How could monetary policy be affected if cash "gifts" to consumers were more frequently used?

A few years ago in the US, everyone who filed taxes received a check for $1000. If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
makerofthings7's user avatar
2 votes
3 answers
250 views

How the Federal Reserve Manages Money Supply

I'm trying to understand how the Federal Reserve manages the money supply via open market operations. According to this post, when Fed buys securities, that increases bank reserves, which allows banks ...
kjmerf's user avatar
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1 vote
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Why did Greenspan think rate hikes would increase treasury term premiums?

Greenspan once called long-term treasury yield's continued downtrend despite his multiple rate hikes a "conundrum." The Fed has research on what is often called "Greenspan's Bond Yield ...
Arash Howaida's user avatar
1 vote
1 answer
79 views

The Federal Reserve is only issuing cash money?

When the Federal Reserve is issuing money, they are only printing cash money (coins and banknotes)? If not, then what other types of money they are issuing?
Joe Jobs's user avatar
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1 answer
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Why did the rate of money supply growth accelerate from 1993-96 in the United States?

Even though the rate of growth in the monetary base decelerated — and the money multiplier decreased for the most part — from 1993-96 in the United States, the growth rate of the M2 money stock still ...
user14013's user avatar
0 votes
2 answers
125 views

Is it possible for the stock market to beat inflation forever?

Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance. I ...
doublefelix's user avatar
0 votes
3 answers
212 views

How much more can the US Federal Reserve spend on COVID-19?

On Mar. 26 2020, the Federal Reserve’s Balance Sheet Tops $5 Trillion for First Time. Is the Fed's spending capped at some maximum? I studied in Canada and am ignorant of U.S. I'm asking about just ...
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0 votes
1 answer
81 views

How does national debt work?

I'm trying to understand national debt. I gather that the United States, and other nations with central banks, accrue debt basically by printing new money at their central bank. This, I hypothesize, ...
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