The Federal Reserve (aka ”The Fed”):

  • System of 12 banks located all around the country, and overseen by a committee based in DC.

  • The Fed is the Agent of monetary policy which is the way the Fed controls the money supply- the amount of money that's in the banking system and how freely that money flows

  • The fed has its principal focus on keeping unemployment low and holding prices steady- preventing inflation and deflation.

  • In the five years following the 2007 Financial Crisis. The Fed pumped $2.7 trillion of new money into the economy in two - rounds of quantitative easing, called QE1 and QE2.-Man v. Markets by Hirsch.

The Treasury

  • The treasury is the agent of Fiscal Policy, which is how the government, via the treasury, uses taxes and spending to influence the economy.

  • The treasury secretary acts as the agent of Congress- his department, which includes the IRS and the US mint, carries out congress's decisions.

  • Printing Money = Quantitative Easing.

Primary Dealers

  • Primary Dealers are banks that have committed to make a market in government bonds. In fact, they buy most of the bonds that the government sells, and then sell those bonds on to the public.