What is the Federal Reserve and what are its responsibilities? : Planet Money The Federal Reserve plays a very important role in the economy. When things start to look uncertain, the central bank is tasked with stepping in to restore people's confidence in the economy. But how do they do it? On today's episode we dive deep on monetary policy and the role of the fed. |At this Summer School, phones ARE allowed during class... Check out this week's PM TikTok! | Listen to past seasons of Summer School here.

Planet Money Summer School 7: The Fed & Volcker's Socks

Planet Money Summer School 7: The Fed & Volcker's Socks

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James Yang for NPR
Illustration by James Yang for NPR
James Yang for NPR

The federal reserve is without a doubt one of the most important economic institutions we have.

The United States' central bank is tasked, first and foremost, with maintaining full employment and keeping inflation low. But in a larger sense, the Fed's job is to create an economy that people can feel confident in.

This is accomplished primarily through monetary policy: the act of adding or removing money from the economy.

When economic growth starts to dip and unemployment ticks up, the fed can inject more money. When the economy is running hot and inflation becomes a problem, the fed can take money out.

Seems simple right?

Well, one of the most important and difficult jobs the Fed has is making tough decisions when those responsibilities are at odds.

For today's class, we bring you two fed stories. A trip back in time to the creation of the Fed as we know it, and the story of the Fed chair who was forced to face one of the central bank's biggest dilemmas ever.

Concepts:

  • Dual Mandate 
  • Price Stability
  • Maximizing Employment 
  • Monetary Policy 

Music: Rip Tide Reggae, Little Ship, Mind Games & Beach Break

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