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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211 views

Dynamic factor model for inflation (UIG)

I'm trying to replicate some results of Fed Underlying Inflation Gauge (UIG) model, which is a dynamic factor model to capture inflation trend. https://www.newyorkfed.org/research/policy/underlying-...
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610 views

Can the Fed control the shape of the entire yield curve?

Is it often taught that the Fed can only affect the short end of the (Treasury) yield curve, while the long end is governed by investors' inflation expectations. Could the Fed in principle control the ...
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Considering how USD enters the market, is the USD actually unbacked? Could the USD represent a unit of a “fund” of securities held by the Fed?

From my understanding, all new money enters the market either 1) by the Fed lending it to banks, so the Fed essentially owns bonds in the exchange, or, 2) The Fed purchasing other financial assets. So ...
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320 views

What happens when a reserve bank runs out of foreign currency reserve?

What happens to a country when a reserve bank runs out of foreign currency reserve?
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Does Fannie Mae get money from the FED

Does Fannie Mae directly or indirectly get money that is printed from the federal reserve to buy mortgages, or have they ever? If so, when has this happened? How much money? What is the process by ...
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1answer
25 views

Does the separation of FinCEN, and The Federal Reserve protect the integrity of a representative democracy? [closed]

From my understanding, FinCEN is controlled or heavily influenced by the UN. In addition, The Federal Reserve is not a governmental body, yet it has appointees from the current administration. I'm ...
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90 views

How does the Fed predict Economic Growth?

Which factors or formulas are used by the Fed to predict Economic Growth?
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1answer
58 views

The Fed has a $4.5 trillion balance sheet: where did they get that money?

Who paid for that $4.5 trillion balance sheet? https://www.cnbc.com/2017/09/19/hedge-fund-titan-ray-dalio-says-to-succeed-in-markets-you-need-to-bet-against-the-consensus--and-be-right.html
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Is the Federal Reserve issuing money in a fair way?

Basic logic says that, once a central bank is issuing new money for increasing the money supply, the money should be distributed fairly between all the citizens, and that means giving them all an ...
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3answers
87 views

How much physical currency does the Fed transfer to banks per year?

I just wonder since money has to enter the system somehow. Currently the Fed will supply whatever banks ask to meet their capital needs. But how much physical currency does the Fed, treasury, and mint ...
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30 views

How does the Fed get money [duplicate]

As far as I'm aware, the Federal Reserve has 4.5$ Billion on its balance sheet. Where did it get the money for buying all those assets? I understand that it makes money out of interest on the bonds ...
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1answer
72 views

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 ...
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639 views

Basic Reason of Why the Money Supply Needs to Increase? [duplicate]

Hello, all. So I am trying to gain a thorough understanding of why the Fed, or any other Central Bank, needs to keep pumping money into the economy as it grows. My question is not asking why ...
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Why did the rate of money supply growth increase 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 ...
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1answer
35 views

Fed, Asset prices, and the Economy

Often you hear people speak about how the Fed has created a fake economy, or one that is propped up with their support, and that they have artificially raised asset prices. What does this exactly mean?...
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1answer
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How and when did the public learn of monetary policy changes before FOMC announcements and press conferences?

I've been reading about the Federal Open Market Committee's announcements of monetary policy decisions, specifically the time at which the announcements are made and then how the markets somewhat ...
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2answers
45 views

Federal Reserve Securities Coming Due

Let's say the Federal Reserve purchases a \$100 one-year Treasury bill from the market, and puts ~\$100 of cash into the economy. A year later, this T-bill comes due, and the Treasury pays the Fed $...
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38 views

Can someone explain to me why no new bill exist to regulate financial derivatives yet? [closed]

Isn't it bad economically for soft regulation on financial instruments like derivatives.
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81 views

Wouldn't reducing Fed Balance Sheet lead to Inverted Yield Curve?

BACKGROUND I am involved in finance, but by no means an economist. I've been reading Ben Bernanke's "The Courage to Act" and have become interested in QE1 and QE2. Currently, I am trying to ...
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1answer
71 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?
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70 views

Why would increased inflation increase the value of the dollar and bond yields?

I was reading this Fortune article (http://fortune.com/2016/11/14/donald-trump-victory-dollar-inflation/) and came across this confusing quote: "'Clearly the market has settled on a 'buy dollar' ...
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1answer
63 views

What physically happens when foreign currency reserves change?

Assume that the United States decided to hold more yuan in the federal reserve. Which processes does that involve? I assume there is some sort of electronic exchange between the two central banks ...
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1answer
2k views

How does the Federal Reserve remove money from circulation?

I was watching a video about what gives money its value, and they say it's the total number of bills in circulation. The Federal Reserve can print or remove money from circulation. But if somebody ...
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2answers
101 views

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?
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1answer
53 views

Why does the Federal Reserve seem to hold so much weight on the unemployment rate, relative to labor participation?

The title is the question. In the press conference held yesterday, the Chair referenced "unemployment" 18 times, relative to "participation" 3 times. If the labor participation is at the lowest ...
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1answer
112 views

What is a bilateral currency swap line? [closed]

Please explain in simple terms. How exactly does it function?
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3answers
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What is the effect of Quantitative Easing on the US budget deficit?

Is the deficit getting larger because of QE?
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1answer
323 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 ...
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2answers
62 views

Can a government or central bank work to reduce inflation without hiking interest rates and causing the currency to appreciate?

Since trying to lower inflation will have some undesirable consequences, such as currency appreciation, which hurts exports, should governments and central banks keep hands off on inflation? But ...
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1answer
806 views

Why not just print money to combat deflation?

If interest rates are zero and inflation is under 2% per year then why not have the fed print money without borrowing until inflation is back at 2% per year? The money could be used to pay off the ...
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48 views

Do you have a list of books about the evolution of the banking sector?

I'm looking for interesting books to read about the banking sector. Topics: Changes in the banking sector, Adaptation of financial services in the digital age, European and US banking regulations ...
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48 views

Dollar Before the Federal Reserve

A lot of bloggers like to write that the dollar has lost 90+% of its value against a basket of goods since the Fed was created. Without a comparison to the former dollar, that's a meaningless ...
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1answer
274 views

Who owns the federal reserve?

Does anyone know who actually owns the federal reserve? It's like a public private institution, who are the private owners, and who are the public owners?
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7k views

Does the Federal Reserve buy and sell stocks?

Can the Fed buy and sell stock in publicly traded companies? Is there evidence of this and, wouldn't this behavior drive the price as opposed to actual market forces?
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The Fed may increase the rates. But will that make the government debt unsustainable?

The US Fed is increasing its interest rate targets. These rates will eventually affect most other interest rates in the US economy. In particular, interest rates on US government bonds will also ...
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2answers
46 views

Macroeconomic effects of Profit Maximizing Federal Reserve

The Fed makes money through its open market operations. I am considering a scenario in which the Fed, instead of trying to achieve goals like controlling inflation, tries to maximize its profits in ...
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2answers
80 views

What is the logic the Fed used for paying interest on reserves?

During the last few years, the Fed has been paying banks interest on reserves. Its a strange policy if you want banks to invest their money in the real economy. Why did they do this? Is it a way to ...
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850 views

Federal Reserve Open Market Operations

I am trying to understand how the Fed effects the fed funds rate. Here it says: Once the Federal Open Market Committee deems that economic conditions warrant a change in the money supply through ...
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1answer
2k views

How often do banks borrow from the Federal Reserve?

Though I've seen plenty of articles talk about in what circumstances banks borrow from the Fed, I haven't seen any quantification on that note. On average, what percent of the money that banks lend ...
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1answer
4k views

Why did the Fed raise interest rates between 2004 and 2006?

Between June 2004 and August 2006, the Fed raised interest rates again and again, because they were "...growing more uncomfortable about inflation". Looking at the graph below, inflation did increase,...
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What is the FRB's Z.1 table L.218

I'm updating a document that cites this: As of December 2011, 67 percent of home mortgage debt was either securitized through agency or non-agency MBS or held on the balance sheets of Fannie ...
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1answer
98 views

Monetary Policy and the Yield Curve PART ONE

As I understand it the Fed has 3 tools for moving interest rates to combat inflation/unemployment: the discount rate, Fed Funds rate and open market operations. I'm trying to understand how the yield ...
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1answer
753 views

Federal Reserve Notes vs Coins

More of a two part question. In the current system (Fiat only currency), why is a Federal Reserve Note booked as a liability (on the Fed balance sheet), but a Coin is not booked as a liability by the ...
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1k views

How much leverage has the Federal Reserve taken on today (Jan 2016)?

http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html?mid=twitter-share-di What makes you most nervous about the future? Debt. The idea that growth will ...
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2answers
244 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: ...
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42 views

Is Eurodollar borrowing close substitute for Fed funds borrowing?

It is often stated that eurodollar borrowing is clost substitute for Fed funds borrowing. In other words, when US banks cannot fund themselves domestically, they might go to the eurodollar market and ...
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3answers
245 views

By what steps and contracts does new money enter the economic system?

Like many noneconomists who read about economic history and finance, I always remain somewhat baffled by the opaque generation of currency under the federal reserve system. My understanding is that ...
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4answers
216 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 ...
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2answers
152 views

When the Fed increases the money supply, does any of the additional supply go directly to the government?

When a central bank increases the money supply, how much of it goes directly into the government purse? Say for example: The money supply is $150 The populace has $100 The government has $50. If the ...
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2answers
283 views

How to find interest rates with fractional reserve banking?

As I understand it, interest rates are set by supply and demand, like any price. Money can be thought of like any other finite commodity. Lenders are willing to supply a certain amount of money at ...