5 Things You Need to Know About the Federal Reserve

We are breaking down some of the basics you should know about the Federal Reserve, how it works, and how it impacts the money in your wallet.

  1. The Federal Reserve System is the central bank of the United States and the most powerful financial institution in the world.

  2. The Federal Reserve is the result of compromise.

  3. The Federal Reserve is the US government’s bank.

  4. The Federal Reserve is also the banks’ bank.

  5. The Federal Reserve has our best tools to confront inflation.

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Episode Resources

THE FEDERAL RESERVE

Transcript

Beth [00:00:00] So let's begins our obsession with inflation, and we are still obsessed with it. And there are some reasons to be feeling those inflationary feelings again, because the consumer price index rose 6.2 percent in October from a year ago. That's the highest level it's had in 30 years. Now again, this is not a U.S. only problem. Countries all over the world are dealing with volatile post-pandemic or this phase of the pandemic economies, and we have better problems than some countries. 

Sarah [00:00:41] This is Sarah Stewart Holland 

Beth [00:00:42] and this is Beth Silvers. 

Sarah [00:00:44] Thank you for joining us for Pantsuit Politics. 

Sarah [00:00:59] Hello, everyone. Welcome to another episode, we are so glad you're here with us today. You know, here on our podcast, we try to bring a different approach to the news, but sometimes a topic in the news needs a little or a lot of background information. And that's the motivation behind our series. Five things you need to know. Sometimes you need to know more information before you can form an opinion or understand a recent headline. Now you can find all our past five things you need to know on Spotify. There's a playlist that will link in the show notes in case you want to go back. But today we're going to tackle five things you need to know about the Federal Reserve. 

Beth [00:01:32] Why are we talking about this? Federal Reserve, I understand, makes a lot of people's eyes roll in the back of their heads. But there is a lot of big do something energy about the economy right now because the prices of some goods are rising and those prices are going up for a whole lot of reasons. I talked on the Nightly Nuance last night about why gas prices are up globally. And we've spent a lot of time together talking about the global supply chain. We've talked about how Americans have a lot of cash in savings, so we're buying more stuff, but we still aren't using services at the same rate we were pre-pandemic. None of these issues are unique to the United States, but the United States government is uniquely suited to do some things about them, and that's because of our a little bit mysterious, very complicated Federal Reserve. And we wanted to tell you more about that today. 

Sarah [00:02:21] Before we get started, I did want to share a little holiday cheer. I have formulated what I believe to be the perfect holiday playlist, Beth, have you listened to Sarah's holiday favorite? 

Beth [00:02:31] Not yet, but it is not for lack of desire to be in the car for a long time today. I've got it ready to go. 

Sarah [00:02:37] Listen, I roll through everything. It's like a very mood oriented organization, which is why you should not shuffle unless you are a monster. Because I go through like Lonely Holiday, the divas of Holiday Music, Kid Holiday, Jazzy Holiday, Country Holiday, Churchy Holiday. You know, I'm saying like, there's some real momentum. I'm very proud of it. Also, I keep adding songs for what it's worth. 

Beth [00:03:03] Someone DM'd us and said that you like holiday melancholy more than she does. 

Sarah [00:03:08] Ooh I love a holiday melancholy. Well, I just put it first, so it might seem like I love it more. I mean, because I do, it is first, but keep pushing through if you don't like holiday melancholy because there's lots more after that, but it's on Spotify, it's on Amazon Music, and one of our amazing listeners put it on Apple Music as well. So we'll put the links to all the holiday playlist services where you can check out Sarah's holiday favorites. 

Sarah [00:03:40] OK, the Federal Reserve, let's do this, y'all. Lots of economics, lots of currency, lots of treasury,. 

Beth [00:03:48] We can do it. 

Sarah [00:03:49] We are gonna get into a lot of stuff. We can do it everybody. We got this. We got this. All right. Let's start at the beginning. The first thing you need to know is that the Federal Reserve System is the central bank of the United States and arguably the most powerful financial institution in the world. 

Beth [00:04:06] Sarah, I thought it might help to start by talking about what money is. 

Sarah [00:04:10] I see I went there and I was like, That's too deep. I don't know. Should we get into what money? 

Beth [00:04:14] I think we should talk for just a second about what money is. It can really make my brain hurt if I start to think too much about it. So I went to the International Monetary Fund. I thought they'd be the authority on what money is, and they tell us that money is something that serves as a store of value. So you can save it and use it later, something that provides a common base for prices or something that people use to buy and sell from each other. And what they said that made the most sense to me is it's kind of easier to understand what money is if you contemplate a world without money and put yourself in the bartering mindset if we don't have money. All we have is stuff to exchange, and some of that stuff doesn't have a permanent value. We don't all agree on what that stuff is worth. Those are the things that money does for us. Right now, we use what's called fiat money, and we're going to talk more about this. But our money is not linked to gold or silver or some other commodity. It is materially worthless. It only has value because we all agree that it does. The IMF says money works because people believe that it will. So I think there's something kind of beautiful in thinking for a second about the fact that we agree what money is, what's not talked about cryptocurrency. Well, just today, say here that we have this shared societal agreement that allows us to use money, and every nation has its way of doing that, of agreeing that its currency has value. Our way is effectively through the Federal Reserve as our central bank. 

Sarah [00:05:36] Well, I think that's going to be a theme throughout this episode, which is when we talk about banks and money and currency, I at least get in this very mathematical frame of mind when in reality the economy is a very emotional beast. It's very much about communications and feelings and how we're all feeling about that. And so release the idea that what we're talking about here is math, because that is not the case in my experience. All right. So let's get into central banks. The Federal Reserve is a central bank, so what's a central bank? The central bank is a financial institution that's in this very privileged position of control over the production and distribution of money and credit for a nation, or it can be a group of nations. So what makes the central bank so special? Well, it's a legal monopoly, basically. It has the privilege and the sole privilege of issuing bank notes and cash. And so that means the Federal Reserve system is the only way to create money in the United States. That's it. OK, we're only going to create money through the Federal Reserve, and they have that monopoly. 

Beth [00:06:41] And with great power comes great responsibility. So there's a dual mandate for the Federal Reserve. They're looking for price stability. That means over time we do not have significant inflation. Prices are not significantly going up or deflation prices are tanking. Over time, what we have to spend on goods and services to live is going to trend upward, but not dramatically. So that's the price stability portion that the Fed has responsibility for. The other responsibility is looking for maximum employment. Our goal is that anyone who wants a job be able to find a job. Both of those goals require consistent access to credit. The Federal Reserve wants banks to have plenty of money to lend and borrowers to have plenty of access to that money. 

Sarah [00:07:24] And the Federal Reserve System is composed of 12 regional Federal Reserve banks. You've probably heard that when we're talking about the governors and the different banks across the country, that's because there's these 12 regional Federal Reserve banks that are each responsible for a specific geographic area of the U.S. No one owns the Federal Reserve. It is a not for profit entity that serves American banks and other financial institutions on behalf of the government. 

Beth [00:07:47] And who oversees that is like a little bit complicated. But part of the reason we have this 12 regional banks is to have some kind of connection between the Federal Reserve and the people of the United States. You hear a lot of controversy about the Federal Reserve because who it is accountable to is kind of an open question. 

Sarah [00:08:08] Well, that's because, number two, this is how we're going to get into number two, because it's the result of a compromise. So when we it feels like we're talking about the Federal Reserve in this sort of amalgamation of the government and private banks and switching back and forth between the relationship between the private and the public. That's because that's by design. OK, so it all starts with the cabinet battle, right? The issue on the table Secretary Hamilton's plan to assume state debt and establish a national bank. You hear this debate in Hamilton, the musical, which is where a lot of our colonial education comes from. Not bad, honestly, credit where credit is due. Hamilton helped me understand the history of the National Bank almost better than any textbook I encountered during my educational career. So in that cabinet battle, they're debating Jefferson and these like agrarian interests. They want to bank under the people's control, public control Hamilton, one of the bank under bankers control. And this debate raged for over a hundred years. Hamilton was successful in establishing the first bank of the United States. But when the bank's 20 year charter expired in 1811, Congress refused to renew it by one vote, one single vote. Then we get a second bank of the United States, which was also chartered by Congress in 1816. But you have this populist fervor stoked by Andrew Jackson, and its charter also wasn't renewed in 1836. 

Beth [00:09:29] And that takes us into the free banking era, which was defined by unchartered banks issuing their own notes. And that led to bank runs and a cycle of financial panics, culminating in the depression of 1893, when gold reserves fell and President Cleveland basically borrowed $65 million in gold from a Wall Street banker whose name you might recognize as J.P. Morgan and the Rothschild banking family of England. And the panic of 1907 happens when, again, J.P. Morgan and other bankers like Rockefeller just used their personal fortune to shore up the banking system because we didn't have a central institution that could inject liquidity or just like print money and put it out into the system. And this is the thing about that private versus public debate. When it is privately done, the entire financial system is subject to the whims, greed, fear, sense of scarcity in families with lots of wealth. And when it's publicly controlled, we have lots of other fights. Neither system is perfect, and I think that's why we land on this kind of weird public private amalgamation of the Federal Reserve. 

Sarah [00:10:40] Well, and I can't help but think like even if if it's in the public interest and you know, these bankers are really just doing what's best. I mean, it meets their interest as well to not let the U.S. financial system collapse. But either way, like even if they're the purest of purest hearts acting in this way, you can see how it builds distrust. Like, I got to believe, the continued conspiracy theories surrounding the name Rothschild could probably find some of their origins in this moment in time when you had bankers getting into their savings accounts and shoring up the U.S. financial system. OK, so after the stock market and almost the entire U.S. economic system collapses, we decide, you know what? This is not working. What happens if J.P. Morgan dies and nobody else wants to bail us out? We need something else to do here. So we get the Federal Reserve Act, which is a compromise between these competing interests. OK, so we have a hybrid public, private, centralized decentralized structure that we have today, where private banks like members of the board at their regional Federal Reserve Bank, those 12 banks we're talking about across the country. But the members of the Board of Governors are selected by the president and confirmed by the Senate. This is why we had this controversy recently with was Biden going to reappoint Federal Reserve Chairman Powell? That's how we get this combo system. 

Beth [00:12:04] The other issue is that at this point in history, we're still on the gold standard. And that is very volatile. 

Sarah [00:12:11] OK, so after World War Two, the United States was basically the only economy not decimated by the war. So we had a lot of gold and we had a stable economy. So we have the Bretton Woods agreement that basically codifies this dominance of the United States currency. They say, OK, well, I'll come to agreement. You guys got it together. You're in charge. We're going to do this with the United States at the head of the financial system globally. But at the time, the dollar, the dollar was still linked to gold and it would go up and it would go down. And in 1971, we had a big issue with that. And so Nixon basically just unilaterally said, we're not gonna do this anymore. He terminated the agreement and said, We're not going to link the dollar to gold anymore. We're going to render the dollar a fiat currency, which means it's not linked to the value of gold or silver, but derives its value based solely on the trust people placed in it. And listen, put a pin in that moment in time, we're going to come back to that when we get to inflation. 

Beth [00:13:07] So the dollar now the modern non linked to gold or silver dollar is the primary reserve currency held by governments worldwide. That means that the central banks or monetary authorities of other countries, their versions of the Fed hold US dollars in very significant quantities. And that's why we say that the Fed is powerful globally, not just here in the United States. It's also why the U.S. government is able to borrow money so inexpensively and so prolifically because we borrow money by selling U.S. treasuries. We just sell IOUs out in the world and other governments and investors across the world think that those are some of the safest, most secure investments on Earth. Because our government guarantees making interest and principal payments on time. 

Sarah [00:13:55] OK, before we get into what this means, let's take a quick break. 

Sarah [00:14:14] OK, let's get into the specifics a little bit more of this public private pieces of this. OK, so we just talked about that the United States dollar is the global reserve currency. OK, the third thing you need to know is that the Federal Reserve is basically the U.S. government's bank. So we've been talking about the Federal Reserve as the central bank, the paramount creator of cash within the U.S. So you might be thinking, OK, so what do they have to do with the U.S. Treasury? Well, this is in the U.S. Treasury is a separate entity from the Federal Reserve. The U.S. Treasury is how the federal government collects and spends money. But money is bigger than the United States government, right? And the Federal Reserve is here for all the money, public and private. 

Beth [00:14:55] So the Treasury keeps basically a checking account with the Fed through which it deposits tax payments and it pays government bills. And the Fed sells and redeems those government securities, savings, bonds and treasury bills, notes. This is how the government gets money to pay its bills, just like we were talking about before the break that we we borrow money by selling treasuries and the Fed does that for the government. By some estimates, there is somewhere between 17 to 22 trillion dollars worth of that government debt out there in various peoples' and countries' hands. They yield an interest rate, but they are very stable so you can sell as much as you want and you basically always know what they're worth. On Ezra Klein's podcast, Adam Tooze described this as the world's piggy bank. It is how people maintain cash reserves because you can get the cash whenever you want the cash. 

Sarah [00:15:49] Right. So you wouldn't put your cash in stocks because stocks go up and down. And so if you're trying to reserve cash for your business or your country, you want to put it somewhere where it will grow a little bit. But if you need it back, you can get it back at about the same values. And that's why U.S. Treasuries are so valuable. And I know what you are saying as some of your long time listeners are saying, Wait, I thought. Sarah says that the United States budget was not like a checking account, and we weren't just putting money in and taking money out. And you're right, you're right. So the difference is in this checking account, as we just mentioned, they can sell treasuries and basically print money. You know, I once heard it described as not spending or saving money, but putting currency into the economy and pulling it out of the economy. So you're basically putting cash out into the global economy or you're taking it back in through taxes, right? And so when they sell those Treasury bonds, they're not just paying their bills, quote unquote, they're putting money into the global economy. 

Beth [00:16:47] Because at this point, this is where your point about math is so important, sarah. At this level, cash is not just cash. Cash is policy about how much you want flowing in goods and services through your economy. Here's another place where you see this relationship between Treasury and the Federal Reserve because often you hear people talking about how the U.S. government can actually just print money. And that's correct. The Treasury literally prints the money through the Mint and the Bureau of Engraving and Printing. That's how the physical bills and coins get made. But then Treasury sells that to the Federal Reserve at manufacturing cost and face value for coins. Treasury also does have some gold still, even though we aren't linked to the gold anymore 

Sarah [00:17:35] In Kentucky. In Kentucky. 

Beth [00:17:37] We have some gold and and most of the gold supply is so we have some in Kentucky. Most of it is that the Federal Reserve in New York, the Federal Reserve, also, we said, is a nonprofit organization. It does make a lot of money doing what it does, though. And that money, all the profit after the Fed's expenses are paid goes to Treasury and is used to fund government spending. 

Sarah [00:17:59] So this is a very symbiotic relationship between the Federal Reserve and the United States Treasury, right? Like we said, it's it's their bank, and that's true. But I don't know about you, Beth, but my bank doesn't sell my debt for me and make a profit for me, and they give the profit back to me, right? OK, so it is the government's bank. But the fourth thing we want you to know is that the Federal Reserve is also like the bank's bank. So like if you're a bank in the United States, your bank is the Federal Reserve. 

Beth [00:18:27] Private banks keep their Federal Reserve deposits at the local Federal Reserve Bank so that they can lend money to each other. The Fed also regulates these private banks to ensure that they're doing all the things that they're supposed to do under law. The duties of the Federal Reserve have expanded over the years, and now they encompass supervising and regulating banks, maintaining the stability of this entire system where money is floating around constantly and providing financial services to depository institutions, the government and foreign official institutions. And that's where the Fed starts to make a profit. Because it is, it is providing services that people pay for them. 

Sarah [00:19:05] And this is where you start to see in the modern era a real dedication to this part of their role. Two months after Alan Greenspan took office as the Fed chairman, but who I think is still probably one of the most famous Fed chairman? Don't you think? 

Beth [00:19:20] I do, and I always have to remind myself that he's married to Andrea Mitchell. I just think that it's a fascinating fact. 

Sarah [00:19:26] So the stock market crashed on October 19th, 1987, two months after he took office, and in response, he ordered the Fed to issue a one sentence statement before the start of trading on October 20th. The Federal Reserve, consistent with its responsibility as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial systems. So he said, to all these banks, don't worry, I got you. You need cash. We're here. And that's what we've seen over the past few decades, just a continued expansion and willingness of the Fed to insert liquidity into the system. 

Beth [00:20:01] And so what does that really mean? It means that the Fed can provide access to funds at a discounted borrowing rate. So anytime we're borrowing money, we are concerned about what the interest rate is because that's the price of the money. It took me a long time to understand that the interest rate is the price of the money. I don't know why it sounded like some mythical dimension of borrowing that differs from anything else, but it's just how much do I have to pay for the privilege of using someone else's cash before I have enough cash to cover whatever I'm paying for, whether it's a house or a car, or a line of credit for the business. The Federal Reserve tries to boost the economy by making money cheaper, and that's why we see so much reporting about when the Fed is considering raising or lowering interest rates. Those baseline interest rates that, it said, impact how much it costs for people all over the world to borrow money. 

Sarah [00:20:52] And when the Fed manipulates the interest rate down, it not only makes borrowing money cheaper, it also makes it less lucrative to save money. So lowering interest rates has the effect usually of encouraging everyone to go out and buy things, spend the money you have on things, borrow money you don't have and spend it on things, buy a house, buy a car, whatever you need to do. 

Beth [00:21:11] And so that approach has continued. The Federal Reserve has used its ability to lower interest rates to grow the economy during tough periods. You saw this big time in 2008, the last major financial crisis, people turned to treasuries and started to buy them up because they wanted those safe investments, not the more volatile investments of the stock market. So the prices of government securities went up and the interest rates went down. And President Trump, that is his formula for a healthy economy. OK. When President Trump was in office, he constantly wanted the Fed to cut interest rates and grow its balance sheet, pump more money out into the economy as cheap and as fast as possible. And in some ways, this is why we try to have a central, independent bank because all politicians want short term growth, even if that means inflation down the road. That's really what happened in 2019. The Fed cut interest rates to nearly zero, and then we get the pandemic, and that is a different kind of economic crisis than we've had before. 

Sarah [00:22:09] So in March 2020, at the beginning of the pandemic, instead of the prices of government securities going up and interest rates going down like we've seen in other financial crises, people were selling these securities, not buying them. The prices were dropping and interest rates were going up. You couldn't find buyers for Treasury securities, which has never happened before. So the Fed steps up and they start buying $70 billion a day worth of these securities for several, several weeks. And this was a huge deal. Didn't get a lot of press coverage because I think it's complicated to understand. But it was a massive step by the Fed to come in and stabilize the government securities market because that's the stability that everything else is built upon. 

Beth [00:23:00] And it also bought corporate bonds, including some of the riskiest investment grade debt to try to keep sectors of the economy from crashing. The Fed was doing a lot more than the United States Congress at the beginning of the pandemic to try to keep the economy from falling apart. And now the economy seems not to be falling apart. And we're going to start talking about tapering. This is like the word of the day and stories about the economy. 

Sarah [00:23:26] Well, and I just think that this is like such another moment to emphasize this was just a feeling. Right? We didn't have any data. We didn't have any understanding of what a pandemic was going to look like. And the truth of it is so many of us got that prediction wrong. We all thought everything was going to tank. No one was going to spend any money, don't buy anything. And then it, you know, cut off the semiconductor manufacturing and sell all the rental cars. Don't make any of the things because Americans are going to lose all their jobs and shut everything down. And in fact, that was not what happens. Right. And we got all those feelings wrong. And so because the economy is based on much on the feeling, then we had to deal from the repercussions of the fact that we a little bit I don't know if overreacted is the right word, but like misdirected are anxiety, I guess. 

Beth [00:24:14] So tapering means that the Fed will start reducing the amount of those securities that it's been buying. They're going to do that sometime later this month. 

Sarah [00:24:25] Soon, soonish.

Beth [00:24:27] Soonish? 

Sarah [00:24:27] Mmhmm. 

Beth [00:24:27] At a pace of about $15 billion a month. And some people are saying you should taper faster than that because we are very worried about inflation. 

Sarah [00:24:37] OK, here we go. That's the word of the hour. The word of the hour. Number five, Why are we always talking about the Fed and inflation? OK. Remember when I said put a pin in that moment when Nixon detached us and the rest of the world from the gold standard? OK, after he did that. Inflation started to skyrocket. It went up almost eight percent in less than a year. So the Fed increased the interest rate on those Fed funds. OK, well, what's that? Like we said before, the Fed is the banks bank, and as such, it sets rates at which they can lend to one another in the effective federal funds rate is the average interest rate. Banks pay for overnight borrowing in the federal funds market. It affects a ton of other interest rates, including the prime rate. Maybe the rate at which you buy a house, all the stuff. So that makes it the most important interest rate in the world. OK, so we're in this moment of massive inflation during the 1970s that I think an entire generation of Americans are still very traumatized by. And the Fed decides to increase the rate. This is bananas that we live in a world now that's like usually zero percent interest rate. The Fed decided to increase interest rate to 16 percent. But then there's a recession. So they panic and they lower the rate. They call this period stop and go, and it was bad. It was a bad approach. This like no change. Oh, can you change your mind. And this is where we learn about the feelings, right? That the Fed managing inflation expectations was a critical factor in controlling inflation itself. I think into that moment they thought, Well, the right is what controls inflation. Yeah, kind of. But also how you talk about the rate, how people feel about the rate, how people feel about the Fed is really huge. And so you have Fed chair Paul Volcker, he ends all of this. He takes it up to 20 percent, 20 percent interest rate in 1980. Again, my parents still talk about their interest rate, how excited they were when it was like 12 percent for their first house and we get another recession, but we end that double digit inflation. 

Beth [00:26:45] So thus begins our obsession with inflation, and we are still obsessed with it. And there are some reasons to be feeling those inflationary feelings again, because the consumer price index rose 6.2% in October from a year ago. That's the highest level it's hit in 30 years. Now again, this is not a U.S. only problem. Countries all over the world are dealing with volatile post-pandemic or this phase of the pandemic economies, and we have better problems than some countries. Japan, for example, cannot seem to get out of deflation. Prices are falling, falling, falling and that is a really bad problem to have. Some of the problems that we have right now are the problems that we've been talking about for a while that we have lots of cash. Most of us lots more savings than we usually have. That changes the shape of the economy. But the feelings that drove the Fed's actions early in the pandemic and that have driven Congress's actions have been a lot about learning the lessons of the past and trying not to under react. So if we have an overreaction that's led to inflation, perhaps that's a better problem than an under reaction that that led to serious recession. 

Sarah [00:28:11] A lot of people assume if the Fed is going to scale back its bond purchasing, that is definitely going to hike the interest rates, and the Fed said not so fast that one does not automatically lead to the other. But whatever happens next, everybody's like we need you to communicate clearly with us. We need to be able to trust you. We need to be able to communicate with you because you can see the stock market. And the more I think hidden securities market react profoundly to whatever the feeling is about, like the way Chairman Powell like raises his eyebrows or scrunches his forehead or, you know, like it's just that level of focus and arguably obsession and interest in what the Fed is going to do next. 

Beth [00:29:00] And I think that's why President Biden decided to keep Chairman Powell in place instead of making a change right now because we are already in a situation that feels pretty precarious to people who really understand financial markets. And most everybody in the public and private sector know Chairman Powell now and can make those assumptions about what his raised eyebrow means. And I think that lends a little bit of stability to a period that is that is calling out for stability. And I kind of put it in the list of things that I keep discovering as I do more research for the Nightly Nuance about supply chain and gas prices, just that where President Biden can do something, he's trying to do something and the list of things he can do about this strange economic period coming away from the worst of the pandemic. It's like a short list because so much of it is global in nature and based on just how everybody's feeling at a particular moment about the economy. 

Sarah [00:29:59] Well, and I just look back at this period in the 70s and 80s and think, OK, well, we were transitioning to a global economy. We didn't really know it, but or maybe some people did. But we were, and we had to go through some really tough growing pains to figure out how to stabilize inside this global economy. But I do think for the most part, we have figured that out and there has been, you know, enormous stability. Even with the 2008 recession, even with the pandemic, feels like the Fed has figured out its role. Now, who knows, because you get to a point where you can't drop the interest rates anymore to provide that sort of juice to our economy. I mean, that's what you see in places like Japan, where they have like negative interest rates, which is a whole other five things you need to know path to go down. But I think that you're, I think you're right, like Biden saw like we have this stability, we have ridden this incredible historical period with the pandemic as best we can. I do think that they're recognizing inflation was not as transitory as they had hoped it would be. That's why you see him talking about scaling back the purchases. And I do think we probably will see an interest rate hike sometime in the next year or so. So we'll just have to see what is that to see. It's all about that. It's all about how we're feeling. It's all feelings. 

Beth [00:31:23] Well and all feelings is a good way to summarize one of the the biggest anti fed headlines that you see. Senator from Kentucky, Rand Paul is constantly talking about auditing the Fed, and that is a feelings driven position. Because the Fed does get audited, there is an independent auditor that goes through all of the Fed's balance sheets. All of that stuff is posted online. Audit the Fed is a way of saying this is too much power concentrated in one institution. And it probably would more accurately be characterized as in the Fed. Like, We don't want this central bank anymore. It kind of takes us back to Jefferson and Paulson, you know. 

Sarah [00:32:00] Stop it. We're done. We settled that Rand Paul. I ain't trying to go back to free banking. 

Beth [00:32:05] But I think that that's what you should tell yourself when you hear that, that what he's really saying is this is too much power. Not that there is no transparency or oversight. There's like a technical thing about the Government Accountability Office role. We could talk about this all day, but I think that the the headline is, do you want a central bank taking this kind of role in the economy, using interest rates as a lever, using its ability to buy and sell securities as a lever? Or do you want it to be kind of the wild wild west all the time? And if you want it to be the wild wild west in the United States, then part of what you're also saying is it's going to be the wild wild west across the entirety of the globe because if we let our currency materially change in its significance, we are changing how everything works for everybody everywhere. 

Sarah [00:32:54] Well, thank you for joining us. As we march through this incredibly complicated, both complicated and ephemeral topic of the Fed. Before we wrap up as we close out 2021, we're getting very excited about all the good things coming in 2022, including speaking engagements. Now we do both in-person and virtual speaking events, and our calendar is filling up fast for the next year. If you or your organization are interested in bringing us to speak, please send our managing director Alise an email at hello@pantsuitpoliticsshow.com or go through our website and she can get you more info about that. Thank you for joining us for another episode. We will be back in your ears on Friday and until then, Keep It Nuanced Y'all. 

Beth [00:33:43] Pantsuit Politics is produced by Studio D Podcast Production.  

Alise Napp is our managing director.

Sarah Megan Hart and Maggie Penton are our community engagement managers. Dante Lima is the composer and performer of our theme music. 

Beth Our show is listener-supported. Special thanks to our executive producers. 

Executive Producers (Read their own names)  Martha Bronitsky, Linda Daniel, Ali Edwards, Janice Elliot, Sarah Greenup, Julie Haller, Helen Handley, Tiffany Hassler, Emily Holladay, Katie Johnson, Katina Zuganelis Kasling, Barry Kaufman, Molly Kohrs.

The Kriebs, Laurie LaDow, Lilly McClure, David McWilliams, Jared Minson, Emily Neesley, Danny Ozment, The Pentons, Tawni Peterson, Tracy Puthoff, Sarah Ralph, Jeremy Sequoia, Katy Stigers, Karin True, Onica Ulveling, Nick and Alysa Vilelli, Amy Whited.

Beth Melinda Johnston, Ashley Thompson, Michelle Wood, Joshua Allen, Morgan McHugh, Nichole Berklas, Paula Bremer, and Tim Miller.

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