{"id":10821,"date":"2015-08-07T07:52:05","date_gmt":"2015-08-07T12:52:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10821"},"modified":"2015-08-07T07:52:05","modified_gmt":"2015-08-07T12:52:05","slug":"who-runs-the-fed","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10821","title":{"rendered":"Who Runs the Fed?"},"content":{"rendered":"<header>\n<h3 class=\"article-image\"><a href=\"https:\/\/www.dissentmagazine.org\/article\/who-runs-federal-reserve-2008-crash\" target=\"_blank\">Who Runs the Fed?<\/a><\/h3>\n<figure class=\"article-image\"><img decoding=\"async\" src=\"http:\/\/www.dissentmagazine.org\/wp-content\/files_mf\/1435081866Canova666.jpg\" alt=\"\" \/><figcaption class=\"article-image-caption\">Ben Bernanke, 2011. (Shirley Li\/Medill DC via Flickr)<\/figcaption><\/figure>\n<\/header>\n<p>The 2008 financial crisis challenged many orthodox assumptions in finance and economics, including the proper role and accountability of central banks. The U.S. Federal Reserve, commonly known as the Fed, is the world\u2019s most powerful central bank.<\/p>\n<p>One major source of Federal Reserve power is its role as \u201clender of last resort,\u201d lending directly to commercial banks through its so-called discount lending window. Traditionally, only commercial banks had access to the Fed\u2019s discount lending since non-bank financial institutions were not subject to the same reserve and capital requirements as those imposed on banks. The other major source of the Fed\u2019s power is its ability to purchase short-term Treasury securities. These restrictions on Fed lending and asset purchases helped support the central bank\u2019s political independence from Congress and the White House by ensuring that Fed policy was socially neutral and did not favor particular sections of financial markets or particular private constituencies. But as the Federal Reserve\u2019s lending and asset purchase powers expanded in unprecedented ways in 2008, these traditional restrictions were swept aside, exposing the flaws of central bank independence.<\/p>\n<p>The Fed is also able to create money\u2014U.S. dollars, also known as Federal Reserve notes\u2014which means there is virtually no limit to the amount of money it can lend and no limit to the volume of assets it can purchase without adding to public-sector borrowing or deficits. During the 2008\u20132009 financial crisis, the Fed extended more than $16 trillion in low interest loans to all kinds of financial institutions in distress, including borrowers who traditionally lacked access to its discount window such as hedge funds and foreign commercial banks and central banks. Also, beginning in 2008, the Fed launched several asset purchase programs, known as \u201cquantitative easing\u201d (or QE), to purchase more than $3.5 trillion in U.S. Treasury securities and mortgage-backed securities (MBS).<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Who Runs the Fed? Ben Bernanke, 2011. (Shirley Li\/Medill DC via Flickr) The 2008 financial crisis challenged many orthodox assumptions in finance and economics, including the proper role and accountability of central banks. The U.S. Federal Reserve, commonly known as the Fed, is the world\u2019s most powerful central bank. One major source of Federal Reserve [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7557,122,7923,303,305,7924,7925,538,7926,661,662,839,2202,877],"class_list":["post-10821","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-purchases","tag-central-bank","tag-dissent-magazine","tag-fed","tag-federal-reserve","tag-lender-of-last-resort","tag-mbs","tag-money-printing","tag-mortgage-backed-securities","tag-qe","tag-quantitative-easing","tag-us-dollar","tag-us-treasury","tag-white-house"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10821"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10821\/revisions"}],"predecessor-version":[{"id":10822,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10821\/revisions\/10822"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}