Federal Reserve Bank

This contribution traces the history of the Federal Reserve Bank of the United States from prior to its creation to the outbreak of the 2007 financial crash. After outlining the series of economic crises that hit the American economy at the end of the nineteenth century and at the turn of the new century, it explores the debate and legislative steps born out of those economic slumps that led to establishing a modern central bank system to stabilise the American economy. Then, it investigates the changing balance of power during the decades leading up to the New Deal era between the Federal Reserve Board and the Federal Reserve banks over the crucial stake of whether or not the latter ones could make open market purchases and sales. Thereafter, this contribution explores the New Deal era, when the Fed was widely reformed, and charts the road to independence from the political system featuring the American central bank over the first few post-WWII decades. Thereafter, it tackles the period from the early 1970s to the outbreak of the 2007-2008 financial crash, when monetary theory and monetarist policymakers took on the American central bank and, with rare few exceptions, made the Fed get the economy stable by resorting to monetary tightening. Finally, it makes sense of the role of the Federal Reserve system in bailing out nation-level insurance companies and banks in the wake of the 2007-2008 financial crisis