The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The New York Fed engages with individuals, households and businesses in the Second District and maintains an active dialogue in the region. The Bank gathers and shares regional economic intelligence to inform our community and policy makers, and promotes sound financial and economic decisions through community development and education programs.
Foreign investors placed roughly $1.0 trillion in U.S. assets in 2011, pushing
the total value of their claims on the United States to $20.6 trillion. Over
the same period, U.S. investors placed $0.5 trillion abroad, bringing total
U.S. holdings of foreign assets to $16.4 trillion. One might expect that the
large gap of -$4.2 trillion between U.S. assets and liabilities would come with
a substantial servicing burden. Yet U.S. income receipts easily exceed payments
abroad. As we explain in this post, a key reason is that foreign investments in
the United States are weighted toward interest-bearing assets currently paying
a low rate of return while U.S. investments abroad are weighted toward multinationals' foreign operations and other corporate claims earning a much higher rate of return.
The Forum. This is where finance happened
in ancient Rome. According to the historian Jean Andreau (“Banking and Business in the Roman World”), both run-of-the-mill banking and high finance took place in the Forum. The former was performed by money lenders (in Latin, argentarii), who were mostly plebeians. The latter, as far as we know, was almost exclusively run by and for the patrician classes: senators and knights (equites).
Money lenders were a professional group (many of them were former slaves).
Taking deposits, making loans, and assaying and changing money (which was then
made of precious metals—gold, silver, and bronze—in different denominations) was how they made their living. Those patricians who were involved in high finance, however, often had a patrimony (land, real estate, slaves) and an income they could live off. Yet they sought to increase their wealth by lending both their money and other patricians’ money. To lend money for interest in Latin is called faenerare; hence, these people were called faeneratores (see also Koenraad
Verboven, “Faeneratores, Negotiatores and Financial
Intermediation in the Roman World”). They were “specialized businessmen who spent all their
time in the forum” (Andreau, p. 15), and who hung around the Janus
vaulted passageway in the Forum: “Both creditors and lenders could be found
there—that is to say both passive investors seeking to place their money and
also intermediaries arranging credit, who were experts at investing money” (Andreau,
p. 16). To quote Cicero (De
Officiis, Book II):
During the 2007-09 crisis, the Federal Reserve took many measures to mitigate
disruptions in financial markets, including the introduction or expansion of
liquidity facilities. Many studies have found that the Fed’s lending via the facilities helped stabilize financial markets. In addition, because the Fed’s loans were well collateralized and generally priced at a premium to the cost of funds, they had another, less widely noted benefit: they made money for U.S. taxpayers. In
this post, I bring information together from various sources and time periods
to show that the facilities generated $21.7 billion in interest and fee income.
Basit Zafar, Olivier Armantier, Scott Nelson, Giorgio Topa, and Wilbert van der Klaauw
Managing consumers’ inflation expectations is of critical importance to central banks in the conduct of monetary policy. But managing inflation expectations requires more than just monitoring expectations; it also requires an understanding of how these expectations are formed. In this post, we present results from a new study that investigates how individual consumers use selected information on food prices in forming their inflation expectations. While the provision of this information leads individuals to meaningfully revise expectations of their own-basket inflation rate, we find there is little impact on expectations of overall inflation.
the Federal Reserve was founded in 1913, the Federal Open
Market Committee, or FOMC,
wasn’t created until passage of the Banking Act of
Congress established the name and legal structure of the FOMC as a formal
committee of the twelve Reserve Banks. In 1935, a System reorganization added
the seven-member Board of Governors to the twelve Reserve Bank presidents—uniting
the centralized and decentralized components of the Fed. In the Banking Act of 1935,
Congress mandated that only five of the twelve Reserve Bank presidents would
vote at any one time, along with the seven governors. The first FOMC meeting
convened a year later, in March 1936.
Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.
The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Donald Morgan, all economists in the Bank’s Research Group.
The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
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