According to economist Allan Meltzer of Carnegie Mellon University, who has written about the history of the

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According to economist Allan Meltzer of Carnegie Mellon University, who has written about the history of the Federal Reserve:

Tension between the [Federal Reserve] Board and the reserve banks began before the System opened for business… . [Paul] Warburg described the problem. Dominance by the Board would allow political considerations to dominate decisions about interest rates. Dominance by the reserve banks “would … reduce the Board to a position of impotence.”
Paul Warburg was one of President Wilson’s initial appointments when the Federal Reserve Board began operations in 1914.
a. Why did Congress set up a system that had this tension between the Federal Reserve Banks and the Federal Reserve Board?
b. Has the tension been resolved in the modern Fed? If so, how?

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Money, Banking, and the Financial System

ISBN: 978-0134524061

3rd edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

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