The Performance Of Fed Balance Sheet In Economic Crises

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. Its duties today, according to official Federal Reserve documentation, are to conduct the nation’s monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions. With the purpose of maximum employment and stable prices, the Federal Reserve takes series policy tools to regulate the Money supply. Especially in the economic crisis, the Fed has been playing as a "lender of last resort" in providing liquidity. This essay study these economic crises and policies in the view of balance sheet of Fed.This essay consists of four chapters:The first chapter is the preface. This chapter is the summarization of study of former in related areas. There is little literature studying the crises in 1929-2011 in the view of balance sheet of the fed. In this essay, the author describes the changes of balance sheet of Fed in these crises and takes use of the basic economic theories and methods to analyze these appearances.The second chapter is the summarization of the Federal Reserve System. This chapter introduces the Fed in structure, functions, and policy tools and so on. Until 1951 the Fed was an independent central bank and before that it was just as a part of Department of The Treasury. In functions, the Fed is not only a bank to Issue currency, but also a bank of lender of last resort. Especially in economic crisis, the function to be a lender of last resort is increasingly prominent. In different periods, primary money policy tools have been changing all the times. It changed from discount window to reserve requirement. As the financial market improves, Open Market Operations was the primary tool.The third chapter is the main sector. This chapter analyzes key programs of balance sheet, such as gold reserve, government securities, Federal Reserve notes and deposit of depository institutions and "so on in seven economic crises. The author combines economic situation and main economic index to explain alteration of these programs. There are twelve crises between 1929 and 2011, but this essay studies only seven of them for the remainder have same background and are similar with these seven crises. The Fed takes import role as a lender of last resort and it also takes part in controlling inflation in these crises. It has indisputable contribution for economic recovery.The fourth chapter is the conclusion of this essay. This chapter summarizes the characters of the Fed balance sheet changes in crises. The balance sheet expend in some extent after each crisis. The ratio of expansion was more than ten percent except two crises.In the 2008 economic crisis, it grew nearly one time. Because the Fed as the central bank is the lender of last resort, it has responsibility to provide liquidity to stabilize financial markets and promote economic growth. Besides scale expansion, the structure of balance sheet is from complexity to simplicity, then to complexity. Because of detaching from Department of The Treasury and Gold standard collapsing, the process to implement money policy has less interference. Besides that, Open Market Operations begin to be prime tool. But in order to stabilize financial markets, the Fed began to use some new tools and the structure came to be complex.This essay is complete after attention and thinking on the relationship of crises and the Fed balance sheet. The author combines the descriptive statistics to basic economic theory to explain crises in different views. Though there were so many thesis on studying money policy and economic crises, little of them study from the view of the Fed balance sheet.Due to the limitation of my knowledge structure, there exists many demerits in this essay and some research to some point is not deep enough. Welcome to point out.