ECON 1102 Lecture Notes - Lecture 9: Federal Reserve System, Janet Yellen, Ben Bernanke
Document Summary
Why was the fed created: 1907 there was a crisis, bank runs, government had no appropriate response. Jp morgan: asked big bankers to donate million to make sure the us didn"t collapse, roughly million in today"s money, woodrow wilson signed into law the creation of the fed december 23rd, What is the federal reserve system: the central bank of the united states, acquires its unique powers through its ability to issue and create money, a bank with two customers, the government"s bank. It maintains the bank account of the us treasury. Issuing, transferring, and redeeming of us treasury bonds, bill and notes: the fed also, regulates other banks, manages the nation"s payment system, protects financial consumers with disclosure regulations, most important function: regulating the us money supply. Fed: m1: currency outstanding and checkable deposits, m2: m1 plus savings deposits, money market mutual funds, etc. Change in money = mm x deposits = deposits/rr.
