Ask Bullwinkle J. Moose about the Federal Reserve’s recently disclosed $7.7 trillion in emergency loans to banks, and he would observe that sum is “antihistamine money. It ain’t nothing to sneeze at.” He would be right; $7.7 trillion is a lot of money. However, much of the story is overblown. Moreover, most commentators skirt the crucial question: If there are financial institutions so large that their failure would throw...
The following data was referenced in a Real World Economics column regarding the $7.7 billion in Federal Reserve lending in the 2008-2010 period, which appeared in the Saint Paul Pioneer Press on December 1, 2011. Table h3hist6 list all borrowing from the Federal Reserve on a weekly average basis from January 1, 1975, through November 16, 2011. Emergency lending in 2008-2010 is largely in the sixth to tenth columns,...
Do regional bank directors, such as the president of the New York Fed, have any power in a financial crisis? And what does it mean when the media describe presidential candidate Herman Cain as having “served on the Federal Reserve Board”? These are two of the good questions about the Federal Reserve system raised recently by readers. The first issue is important, especially because the president of the New...
Despite widespread disgruntlement and much pessimism about the direction of the nation, we in the United States still have much for which to give thanks this year. I personally am thankful for family, friends, health and that all the material needs of my wife and I are amply met. Moreover, I am thankful that we enjoy a high level of freedom and liberty, both as a society and as...
With its deadline only a few days away, there seems a high probability that the deficit supercommittee will fail to reach consensus. Then, there may be cuts in defense spending that many, including Defense Secretary Leon Panetta, deem disastrous. Such spending accounts for about 19 percent of the federal budget for fiscal year 2011 and 5 percent of total national output. And as usual, the nation is divided on...