Lecture_11_spring_2009

Lecture_11_spring_2009 - Lecture 11 Econ 2 Tracking the...

Info iconThis preview shows pages 1–23. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 11 Econ 2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Tracking the Economy
Background image of page 2
Tracking the Economy
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Tracking the Economy
Background image of page 4
The Federal Reserve The History and Structure of the Federal Reserve System Founded by the Federal Reserve Act of 1913 The primary mission of the Fed is to promote economic growth, low inflation, and stable financial markets.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
The Federal Reserve Recall what was happening just before 1913: Banking panics One large one each decade Interest rate seasonals Borrowing by farmers
Background image of page 6
The Federal Reserve One key feature is central bank independence Independent of what? Politics Martin and LBJ Nixon and Burns
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
WHO MAKES MONETARY POLICY ?
Background image of page 8
Seven members are nominated by the President and confirmed by the Senate. Confirmed Governors are appointed to non-renewable fourteen year terms. Board of Governors
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
BOARD OF GOVERNORS Duke Bernanke ? Kohn ? Warsh Tarullo
Background image of page 10
The Chairman is nominated by the President and confirmed by the Senate to serve a four year term. Ben Bernanke is the current Chairman. Board of Governors
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Member of the Board of Governors August 2002- June 2005 Member of the Board of Governors (current term): February 1, 2006 – January 31, 2020 Chairman of the Federal Open Market Committee: February 1, 2006 - January 31, 2010 BERNANKE’S TERMS
Background image of page 12
BEN BERNANKE IS NOT THE HEAD OF THE FEDERAL RESERVE BANKS Reserve Banks
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Private banks who are members of the Federal Reserve System are required to purchase non-voting stock in the Federal Reserve Bank of the district in which they are headquartered. Federal Reserve Banks
Background image of page 14
BEN BERNANKE IS THE HEAD OF THE FOMC Federal Open Market Committee FOMC
Background image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
The Federal Open Market Committee (FOMC) is the group that determines open market policy for the Federal Reserve System. Open market policy is used to control the money supply in the economy
Background image of page 16
Money and Its Uses M1 Sum of currency outstanding and balances held in checking accounts M2 All the assets in M1 plus some additional assets that are usable in making payments but at greater cost or inconvenience than currency or checks
Background image of page 17

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Money Supply Money measures Federal reserve release
Background image of page 18
Commercial Banks and the Creation of Money 100% vs. Fractional Reserve Banking Government issues $1000 People want to place their $1000 in a bank
Background image of page 19

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Consolidated Balance Sheet of Commercial Banks (Initial) Assets Currency $1,000 Liabilities Deposits $1,000 Dollars are the bank’s reserves Reserves = deposits: 100 percent reserve banking Reserves are not part of the money supply Deposits are part of the money supply
Background image of page 20
Commercial Banks and the Creation of Money Bank Reserves Cash or similar assets held by commercial banks for the purpose of meeting depositor withdrawals and payments 100 Percent Reserve Banking A situation in which banks’ reserves equal 100 percent of their deposits
Background image of page 21

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Commercial Banks and the Creation of Money Let’s assume a fractional reserve system Need only hold 10% of deposits as reserves
Background image of page 22
Image of page 23
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 72

Lecture_11_spring_2009 - Lecture 11 Econ 2 Tracking the...

This preview shows document pages 1 - 23. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online