‘No Dumb Questions’: What is the Fed?

The Federal Reserve is among the most consequential government entities in the United States; it’s probably also among the least well understood. Which makes the question “What is the Fed?” an ideal candidate for our regular “No Dumb Questions” series.

The institution has been around since 1913, when Congress passed the Federal Reserve Act to set up, in essence, a central banking system for the country. As Grid’s Economics Reporter Matthew Zeitlin notes in this week’s episode, the Fed controls monetary policy by setting interest rates and works via a “hybrid structure” that includes a chairperson selected by the president (Jerome Powell is the current Fed chair), a board of governors and a group of regional banks. Beyond the basic “What is the Fed?” question, Zeitlin gets into some of its inner workings here; he discusses the Federal Funds Rate, the Fed’s so-called “Dual Mandate” and the role of oversight hearings in the Fed’s work. There’s all that and more, as they say – including an explanation of the profound impact the Fed has for the U.S. and global economies and for individual consumers as well. (And Zeitlin does it all in less than three minutes.)

Given the current state of the economy, in particular the fight against inflation, the Federal Reserve is in one of those periods when its already-important work is magnified. A good time, then, to turn to Zeitlin and that not-dumb question: “What is the Fed?”

We’d love to hear from you with other ideas for the series. We like to think there are no “dumb questions”; or put differently, that there’s almost nothing out there in the world of news and information that couldn’t use a little more clarity and context in terms of the answers. We also know that we have really smart readers and that even the smartest among them can’t be expected to have every shred of important context or background on all the events that are roiling the world at any given moment. Send your ideas and questions to tips@grid.news.


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