Treece Blog: Dec. 3 film screening to examine Federal Reserve SystemWritten by Ben Treece | | email@example.com
In the coming weeks, I want to discuss the Federal Reserve System. What is it, what does it do and how? The Fed, as it is known, is one of the most misunderstood institutions in the world. For those interested in the history and impact of the Fed, Treece Investment Advisory Corp. will host a film screening at 6:30 p.m. Dec. 3 at the Maumee Indoor Theatre of the Federal Reserve documentary “Money for Nothing: Inside the Federal Reserve.”
Back in 1907, the U.S. banking system was a mess. It was not uncommon for depositors to withdraw their entire holdings from a bank in one fell swoop, resulting in a liquidity crisis. This lack of liquidity could and often did result in bank closures and individuals losing their entire savings (remember, the FDIC did not exist until 1933). There was no institution that could provide liquidity to the banking system in the event of a bank run.
Members of the banking sector began to notice that this was a problem and looked for a solution. The answer came from Great Britain and the Bank of England. The Bank of England, which had been open since 1694, essentially operated as Great Britain’s Federal Reserve and provided liquidity to the banking system. American bankers began to realize that the United States needed a central bank modeled after the Bank of England.
Fastforward to 1910. Five of the country’s biggest names in finance traveled by private railcar to a weeklong conference at the Jekyll Island Club on the southern Georgia coast. This secret meeting would lay the foundation and some of the key provisions for the Federal Reserve Act of 1913, establishing a quasi-public/private bank that was not technically a government agency, but forwarded all of its operating profits to the Treasury Department.
The structure of the Fed has remained relatively unchanged over the years; we have a head governing board located in Washington, D.C., and several regional banks that are overseen by the head bank and owned by member banks. All of these banks together encompass the Federal Reserve and operate with the goals of providing liquidity to the banking sector, preventing economic catastrophes and setting monetary policy such as lending rates and money supply.
In theory, a private group such as the Fed setting monetary policy is for the better. Imagine for a moment if every change in interest rates had to go through both chambers of Congress for approval. The Fed operates in a more efficient manner relative to Congress, and decisions can be made much faster. If Congress alone had control over our monetary policy, you would quite literally see political parties holding the economy hostage. The Fed can make decisions faster than the government, but what would happen if those making the decisions were to make a miscalculation?
There is no cost to attend the Dec. 3 screening, but we do require reservations as seating is limited. Anyone who would like to attend may call our office at (419) 843-7744 or email your name, telephone number, and number of seats that you would like to reserve to firstname.lastname@example.org.
Ben Treece is a 2009 graduate from the University of Miami (FL), BBA International Finance and Marketing. He is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and licensed with FINRA through Treece Financial Services Corp. The above is the opinion of Ben Treece and should not be construed as investment advice or used without outside verification.
Tags: "Money for Nothing: Inside the Federal Reserve", 1907, Bank of England, documentary, FDIC, Federal Reserve Act of 1913, Federal Reserve System, Georgia Coast, Great Britain, Jekyll Island Club, Maumee Indoor Theater, railcar, the Fed, US banking system