leaf

The Federal Reserve has many committees and branches. When we refer to the Federal Reserve, are we talking about the Board of Governors of the Federal Reserve, or the Federal Open Market Committee?

What is the relationship between the various institutions within the Federal Reserve's organizational structure? How do they make decisions? How will this organizational structure and relationships affect U.S. monetary policy?

Those who pay attention to the Federal Reserve often like to categorize its officials into two factions: hawks and doves. They believe that the two are in opposition, each having their own understanding of monetary policy and financial stability. In the second part, we will also interpret the differences in policy proposals among Federal Reserve officials through an introduction to the hawkish and dovish factions, using their opposition and contradictions. Hawks emphasize discipline, while doves emphasize flexibility, each having their own unique preferences regarding the direction of Federal Reserve policy.

"Monetary Policy in the 21st Century" is authored by Ben S. Bernanke, who, along with Douglas W. Diamond and Philip H. Dybvig, was awarded the 2022 Nobel Prize in Economic Sciences "for their research on banks and financial crises."

Ben S. Bernanke took office as Chairman of the Federal Reserve in February 2006 and stepped down in January 2014. During his tenure, the Federal Reserve implemented unprecedented quantitative easing policies, purchasing billions of dollars in mortgage-backed securities and long-term government bonds to stimulate economic growth.

Born in 1953, Bernanke graduated from Harvard in 1975 and pursued a Ph.D. at the Massachusetts Institute of Technology. He studied macroeconomic theory under the renowned economist Stanley Fisher, focusing his research on the Great Depression, proposing that monetary contraction under the gold standard led to the Great Depression. He taught at Stanford and Princeton, was nominated to the Federal Reserve by George W. Bush in 2002, and served as Chairman from 2006 to 2014. When he joined the Federal Reserve, the U.S. economy was in a relatively good period. As a monetary economist with a background in studying the Great Depression, his concerns about economic crises made him "a stranger in the Federal Reserve."

Academic Contributions

1. Research on the Great Depression of 1929. He believed that the occurrence of the Great Depression stemmed from liquidity contraction, but the root cause was the gold standard system. The inherent flaws of the gold standard led to the offsetting of gold inflows by surplus gold countries in the 1930s, triggering monetary tightening. Monetary contraction then transmitted globally through the gold standard.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to the combined effects of three major economic development factors, of course, political factors and social environments will also influence policies.

Also known as "reverse repurchase agreements," this involves setting repurchase rates and borrowing from securities dealers and other non-bank financial institutions using securities held by the Federal Reserve as collateral (targeting non-bank financial institutions).

The turmoil in the U.S. money market in September 2019 showed that the Federal Reserve's previous balance sheet reduction had been excessive, reflecting a trial-and-error process.

2. The "financial accelerator" theory.

The financial accelerator refers to the amplification and enhancement effect of the financial system on shocks. He argued that the more imperfect the financial market and the higher the agency costs, the more pronounced this amplification effect becomes. Since agency costs are counter-cyclical, they extend and amplify cycles.

The Federal Reserve System was established on December 23, 1913, and is abbreviated as the Fed, serving as the central bank of the United States. The Federal Reserve consists of a Board of Governors with general supervisory authority in Washington, D.C., and 12 regional Federal Reserve Banks with considerable autonomy, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Today, the U.S. banking system includes three types of banks: federally chartered banks, state-chartered banks that are members of the Federal Reserve, and state-chartered banks that are not members of the Federal Reserve, each with different combinations of regulatory agencies.

It is recommended to read another book, "Restoring the True Federal Reserve," as populists have long harbored hostility toward finance and government. It is worthwhile to understand the historical context of the establishment of the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836), as well as the power struggles between figures like Alexander Hamilton (the first Secretary of the Treasury and a proponent of the central banking system), Thomas Jefferson (the third President of the United States), and James Madison (the fourth President of the United States).

The Banking Act of 1935 increased the powers of the Federal Reserve Board, removing the Secretary of the Treasury and the Office of the Comptroller of the Currency (the regulator of federally chartered banks) from the Federal Reserve Board, reducing the autonomy of regional Federal Reserve Banks, and forming the basic decision-making structure of the modern Federal Reserve. In March 1951, the Treasury and the Federal Reserve reached an agreement to gradually eliminate the policy of pegging interest rates, laying the foundation for modern monetary policy. The Federal Reserve Reform Act of 1977 formally stipulated that Congress oversees the dual mandate of the Federal Reserve's monetary policy: maximum employment and stable prices.

Overview of the Federal Reserve:#

Main Responsibilities: Monetary policy, bank regulation, and responding to threats to financial stability.
Tenure: Board members cannot be dismissed by the President due to policy disagreements; they can only be removed for misconduct or impeachment by Congress, reflecting the compromises made at the establishment of the Federal Reserve.
Monetary policy, including setting short-term interest rates and other measures, aims to influence overall financial conditions and, through these measures, affect economic development. According to relevant laws, monetary policy is formulated by a larger organization known as the Federal Open Market Committee. The Federal Open Market Committee meetings include 19 policymakers (the full number), comprising 7 members of the Federal Reserve Board and 12 regional Federal Reserve Bank presidents, along with staff from the Federal Reserve Board and each regional Federal Reserve Bank.

Monetary policy seems to have been very successful in controlling inflation and guiding economic growth, but it has proven to be much less precise in managing the erratic long-term bond yields and stock prices.
—— Ben S. Bernanke

Recently, I read the new book "Monetary Policy in the 21st Century" by former Federal Reserve Chairman and 2022 Nobel Prize winner Bernanke, and I gained many insights and reflections. This is the author's third classic work, following "Inflation Targeting: International Experience" and "Courage to Act: A Memoir of a Financial Crisis and Its Aftermath."
The research theme of this work is "the changes in policy tools, policy frameworks, and communication methods as the modern Federal Reserve fulfills its main responsibilities and pursues its macroeconomic goals after World War II." It can be regarded as a history of Federal Reserve policy practice and evaluation from 1951 to 2021. No longer constrained by the gold standard and the 1951 Treasury-Federal Reserve Agreement, these two conditions allowed the Federal Reserve to freely use monetary policy to pursue its goals, marking the beginning of modern monetary policy.

The changes in the Federal Reserve's policy tools, frameworks, and communication methods are mainly due to