The Federal Reserve's trickle-down problem

Does the Fed's toolkit only work for the rich now?

The Fed is in a trickle-down bind.
(Image credit: Ikon Images / Alamy Stock Photo)

The Federal Reserve's annual get-together in Jackson Hole, Wyoming, starts Thursday. This year's theme is "Designing resilient monetary policy frameworks for the future." Which is a fancy way of saying: "Everything we used to do isn't working anymore, so what the hell do we do now?"

The Federal Reserve is a creature created by Congress, and the policy tools it has are defined by the legal charter Congress wrote. Those tools basically boil down to creating money to buy various financial instruments (usually U.S. government debt) from the banking system or sell them back. Different tools can effect short-term interest rates or long-term ones. They can involve standard monetary policy, unconventional monetary policy like quantitative easing, or even paying banks interest on their reserves.

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.