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Two Federal Reserve Myths That Need Debunking


First Posted: 07-22-08 03:45 PM   |   Updated: 07-30-08 05:12 AM

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Fed Myth

NEW YORK (Fortune) -- There are two things you may have heard about the Federal Reserve Board, both of which are wrong.

The first is that the Fed controls U.S. interest rates.

The second is that the Fed has made so many commitments that it's in danger of running out of cash or Treasury securities. Which would mean it couldn't carry out its declared policy of putting cash into the world financial system or its undeclared policy of keeping institutions that it deems worthy afloat. Let me show you why both of these beliefs are myths, not reality.

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Filed by Dave Burdick  |  Report Corrections