The Federal Reserve (Oct. 6): The Economics and Politics of Money

Most people understand that the Federal Reserve is a very powerful institution. The Federal Reserve affects interest rates, employment, and inflation for the entire economy. How did the Fed become so powerful and important? We will examine the Fed from three angles: its history, the policy tools it uses to affect the economy, and the current controversy about the independence of the central bank. Presidents have always attempted to influence the policies of the Federal Reserve, but have we entered a new era where the White House is openly challenging the Fed’s autonomy?

Dennis Sheehan, Ph.D., is professor emeritus of finance at the Penn State University Smeal College of Business. He previously taught in the business schools at Purdue University, the University of Chicago and the University of Rochester. He earned a bachelor’s degree in economics from Georgetown University and received his Ph.D. in economics from the University of California at Berkeley.