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93. Finally, Fed Independence: The Fed Deep Dive Part 4
Manage episode 488501799 series 3478584
In “The Fed Deep Dive Pt. 4” we discuss the historical evolution of the Federal Reserve's power and priorities. During World War II, the Fed was essentially controlled by the Treasury, pegging interest rates low to finance war efforts, which later led to significant inflation. The 1951 Treasury-Fed Accord granted the Fed independence, allowing it to focus on managing the economy and fighting inflation. The 1970s brought the "Great Inflation," driven by government spending, oil shocks, and the flawed belief in the Phillips Curve, which suggested trading off inflation for lower unemployment. Congress established the Fed's dual mandate in 1977, requiring it to pursue maximum employment and stable prices.
In 1979, Paul Volcker became Fed Chair and shifted the approach to combatting inflation by targeting the money supply instead of just interest rates, inspired by monetarist theory. This led to drastically high interest rates, reaching 20%, which induced recessions but successfully brought inflation down. The Volcker era emphasized price stability as the foundation for long-term economic health, and the Fed learned that prioritizing policy over political pressures is crucial. This history highlights the evolution of the Fed's role and the critical importance of its independence and focus on controlling inflation for overall economic stability.
The big takeaway?
✨ The Fed learned that price stability is the foundation of everything else—jobs, growth, and economic confidence.
✨ And history shows us what happens when the Fed’s priorities get steered by politics instead of policy.
------------------------------------------------
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Sponsorship Inquiries: [email protected]
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✨ Follow Jess Inskip on TikTok and Instagram ✨
✨ Follow Jessie DeNuit on TikTok and Instagram ✨
**Beware of imposters! We will never message you and ask you for money directly.**
About Us 🌚🌞
Market MakeHer is an investing education podcast taught teacher-learner style by a 15-year finance expert, Jessica Inskip, to her very inquisitive beginner investor friend, Jessie DeNuit. We want to help you get better with your “finance-sis” (get it? No finance bros here). Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We believe that investing is for everyone and that's why we break down complex investing topics - from "Her" perspective. You’ll also learn about free tools and resources on our podcast and we offer a ton of free educational content on our website so you can become fin-fluent.
Important Disclosures: Market MakeHer podcast provides financial literacy education. Tools and resources mentioned are for informational and educational purposes only. Remember, investing involves risk, and there's always a potential for losses when investing in securities. Market MakeHer LLC provides educational content and resources, but we are not registered
94 episodes
Manage episode 488501799 series 3478584
In “The Fed Deep Dive Pt. 4” we discuss the historical evolution of the Federal Reserve's power and priorities. During World War II, the Fed was essentially controlled by the Treasury, pegging interest rates low to finance war efforts, which later led to significant inflation. The 1951 Treasury-Fed Accord granted the Fed independence, allowing it to focus on managing the economy and fighting inflation. The 1970s brought the "Great Inflation," driven by government spending, oil shocks, and the flawed belief in the Phillips Curve, which suggested trading off inflation for lower unemployment. Congress established the Fed's dual mandate in 1977, requiring it to pursue maximum employment and stable prices.
In 1979, Paul Volcker became Fed Chair and shifted the approach to combatting inflation by targeting the money supply instead of just interest rates, inspired by monetarist theory. This led to drastically high interest rates, reaching 20%, which induced recessions but successfully brought inflation down. The Volcker era emphasized price stability as the foundation for long-term economic health, and the Fed learned that prioritizing policy over political pressures is crucial. This history highlights the evolution of the Fed's role and the critical importance of its independence and focus on controlling inflation for overall economic stability.
The big takeaway?
✨ The Fed learned that price stability is the foundation of everything else—jobs, growth, and economic confidence.
✨ And history shows us what happens when the Fed’s priorities get steered by politics instead of policy.
------------------------------------------------
🌟 Send a question, leave a review, subscribe, follow & share!
🔗All Market MakeHer Links: https://bio.site/marketmakeHER 🔗
Market MakeHer website
Subscribe to our Newsletter
Sponsorship Inquiries: [email protected]
Instagram @marketmakeherpodcast
TikTok @marketmakeher
Join the FB Community
👀 Watch us in action on our YouTube Channel 👀
✨ Follow Jess Inskip on TikTok and Instagram ✨
✨ Follow Jessie DeNuit on TikTok and Instagram ✨
**Beware of imposters! We will never message you and ask you for money directly.**
About Us 🌚🌞
Market MakeHer is an investing education podcast taught teacher-learner style by a 15-year finance expert, Jessica Inskip, to her very inquisitive beginner investor friend, Jessie DeNuit. We want to help you get better with your “finance-sis” (get it? No finance bros here). Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We believe that investing is for everyone and that's why we break down complex investing topics - from "Her" perspective. You’ll also learn about free tools and resources on our podcast and we offer a ton of free educational content on our website so you can become fin-fluent.
Important Disclosures: Market MakeHer podcast provides financial literacy education. Tools and resources mentioned are for informational and educational purposes only. Remember, investing involves risk, and there's always a potential for losses when investing in securities. Market MakeHer LLC provides educational content and resources, but we are not registered
94 episodes
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