assignment5a - The formal structure of the Fed indicates a...

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The formal structure of the Fed indicates a highly decentralized organization. Is this true in reality today? Can you build a case for reducing the Fed's independence? Is there a relationship between central bank independence and inflation? Explain. Who is the current chairman of the Federal Reserve? Which president first appointed the chair? Have there been re-appointments? How does the current chair compare with the previous one? The formal structure of the Federal Reserve is highly decentralized. This is realistic because there is twelve regional reserve banks which help guide local areas as well as report into the centralized system which is the Board of Governors also known as the Federal Reserve Board. The reserve banks still operate as a decentralized organization as originally developed in 1913 and is still under the general oversight of the Federal Reserve Board. While Congress overseas the entire Federal Reserve System and it executes the laws written by Congress as well as the regulations written by the Board of Governors. There is a need to keep the Fed highly independent from the Executive and Legislative branches of the government. The Fed operates on the money it makes from interest and other sources and therefore doesn’t require asking for funds from Congress to operate. The autonomy the Fed has is important. By controlling the money supply, it keeps the Treasury, Congress and the President from expanding or contracting the money supply in order to take an easier path
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This note was uploaded on 09/07/2011 for the course ECON ECO 201 taught by Professor Unknown during the Spring '09 term at New York Institute of Technology-Westbury.

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assignment5a - The formal structure of the Fed indicates a...

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