Test 5 Flashcards
How was the Federal Reserve Bank planned?
A secret meeting.
What was also created during the same time of the federal bank?
The income tax.
How many large banks failed in the Great depression?
Just one.
What is the Achillies heel of banking?
The money is invested long-term, but the banks investments are short term.
What was one of the reasons the Federal Bank was created?
To keep panic from spreading to major banks
Who appoints members of the board of governors? Directors?
The president appoints the board of governors, but no one appoints the directors.
Describe the federal reserve bank.
The federal reserve bank is a privately owned corporation whose shares of ownership are held by member banks.
How does the government borrow money from the FRB?
By issuing treasury debt certificates for the bank to buy.
How does the government monetize its debt?
It pays a lower rate of interest to the central bank than it would pay in a free market.
What happens when the Fed purchases any asset?
It creates the money.
How often has the Fed been audited?
NEVER.
Who are the Federal Reserve meetings open to?
No public officials.
What does the Federal Reserve bank regulate?
The reserve requirements of commercial banks.
What happens when the Fed buys U.S. treasury bills?
It increases the money supply.
How did the Fed aquire all of the gold?
The government sold it to them.
