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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1answer
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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1answer
83 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
72 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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2answers
72 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
68 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
3k 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
104 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
54 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
2k views

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
330 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
973 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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0answers
49 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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0answers
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
280 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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5answers
12k 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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2answers
77 views

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
49 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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2answers
869 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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0answers
14 views

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
108 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
874 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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1answer
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
261 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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0answers
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
260 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
237 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
153 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
289 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 ...
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2answers
720 views

Why does the Fed control interest rates?

The Fed more or less controls interest rates using open market operations, but why? Why are interests rate not controlled by supply and demand?
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3answers
152 views

Does the Fed use misinformation as a tool for good monetary policy?

The Congress established the statutory objectives for monetary policy-- maximum employment, stable prices, and moderate long-term interest rates --in the Federal Reserve Act. http://www....
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1answer
203 views

Why is the Fed considering increasing interest rates?

America's Fed Funds rate is below 1% and its growth rate is 3.9%. India's lending rate is approximately 9.5% and its growth rate is 5.1%. India just dropped its lending rate while the US is ...
4
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1answer
183 views

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 ...
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0answers
30 views

Federal Reserve conditions [duplicate]

Does the Federal Reserve have conditions attached to the money that's created and distributed to major banks?
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2answers
669 views

Why did the Federal Reserve change the data about USA GDP?

This is the data published on 20 March 2013 FOMC meeting: (http://www.federalreserve.gov/monetarypolicy/fomcprojtabl20130320.htm) 20 March 2013, Change in real GDP (actual): year 2008: -3.3% year ...
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2answers
725 views

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 ...
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3answers
185 views

Does the current situation of excess reserve imply failure of QE?

Excess reserve @ Fed In the past it was assumed that excess reserves should be kept around 0 and banks should be lending to each other as much as they are borrowing. The central banks would correct ...
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1answer
44 views

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 ...
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1answer
5k views

Are bank reserves part of M1 or only part of M2, and why?

(1) Toyland earns $$100,000 revenue in cash this week. Toyland managers use this $100,000 to pay down a short-term loan from Bank One. Bank One keeps the cash in reserve. As a result of this ...
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1answer
164 views

Is monetary expansion the same as quantitative easing

Is monetary expansion policy the same as quantitative easing (i.e the buying of US treasuries by Federal reserve which injects more USD into the economy)?
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229 views

Reserve Ratio Requirements and Money multipliers [closed]

Draw the T-accounts for Fred's Bank if the FED buys a $20,000 treasury security from Fred and Fred puts all the money he gets for it in the bank. Assume the reserve requirement set by the FED is 8%. ...
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5answers
2k views

How can banks pay interest to the central bank?

If the central bank is the only institution that can increase the monetary base (create both, digital and paper money), how can any institution that borrows from it (mostly banks) satisfy its interest ...
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1answer
95 views

What assurances are there that the Federal Reserve does not give money to banks?

My understanding of the operation of the United States Federal Reserve Bank is that it invents dollars by a unilateral, unbalanced credit to its own account and then it loans this money to member ...
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1answer
90 views

What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?

What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance? Quantitative easing and unconventional policy actions such as asset purchases and ...
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1answer
124 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 ...
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2answers
162 views

What might happen if the Fed stopped paying interest on excess reserves?

I am curious to hear what economists think might happen if the Fed stopped paying interest on reserves held in excess of the penalty free upper bound. I am also curious to know how economists think ...