ronsatspokane
Gold $$ Contributor
I am fairly well versed in the Fed and its operations. You cannot borrow from the Fed. The fed will loan to financial institutions when they cannot meet their reserve requirement. The duration of those loans is often only 24 hours.
The fed has 5 major functions. Let's look at how successful they are:
1) The fed conducts monetary policy by controlling the amount of currency in circulation. The purpose is to provide for stable prices and employment.
Grade: Fail. The economy is so flush with cash that inflation was over 9 percent and remains over 6 percent.
2) The fed supports financial stability. It does so by monitoring and mitigating financial risk.
Grade: Fail. The fed was nowhere to be seen when SVB or Signature banks failed and they had been failing for months. Can anyone say where they were in 2008?
3) Supervising and regulating financial institutions. The purpose to promote stability.
Grade: Fail. Two banks have failed, more appear to be facing the same problem and now Credit Suisse is in trouble and they have significant US operations. Let's not even talk about 2008.
4) The fed supports payment settlement.
Grade: C. Payment settlement appears to be functioning at this point. Nothing extraordinarily positive of negative.
5) The fed provide consumer protection. It does this by attempting to enforce laws against lending fraud deposit theft and well as other types of nefarious activities.
Grade: Fail. Some were able to liquidate equity positions in failing banks and empty their accounts prior to the banks failing. Clearly there were criminal activities afoot.
