Fed Reserve

Many points of interest stood out during our Federal Reserve field trip. I felt as if I had a descent understanding of the Fed’s structure and basic operation, but its magnitude blew me away. The building itself was impressive. The design and architecture were reminiscent of Frank Lloyd Wright’s Fallingwater. At first I thought this would be a boring sleep-fest, but after the initial video, my eyes were wide open.

The Fed’s monetary policy is fairly easy to understand. The three primary tools used are simple enough: the discount rate, reserve requirements, and open market operations. As we discussed in class, they affect the flow of money in the banking system. The discount rate is the interest rate charged to banks for short-term loans. Reserve requirements state banks must hold a minimum in reserve. Open market operations pertain to the buying and selling of U.S. government securities. Fairly simple, one might think, until you glimpse the scope of just one of 25 branch locations in addition to the 12 main Reserve banks. This operation is overwhelmingly immense.

Not only is the structure and scope huge, the precision and timing of the Federal Reserve is amazing. Below, I’ve listed some intriguing findings. The Fed is so active that transport planes fly once a day between all 12 Federal Reserve banks. Our branch’s coin vault contains between 6 and 7 million dollars. Their paper vault has another 950 million to one billion dollars. I’ve used numbers that big before in discussion, but actually gazing upon one billion dollars is breath-taking. On top of that, our branch shreds approximately 7.5 million dollars weekly. The paper verification machine is huge. It is the centerpiece in a rather large room. It contains 7 sensors that process 17 notes per second, totaling 750,000 notes per day.

As we’ve discussed in class and seen in the news, technology