Richard Peach, senior vice president in the Macroeconomic and Monetary Studies Function of the Federal Reserve Bank of New York, delivered a stimulating lecture on economic policy to hundreds of engaged students in SUNY Cortland’s Function Room in Corey Union Monday afternoon.
The event was formerly scheduled for Corey Union’s Exhibition Lounge, but after the widespread power outage across Cortland County Monday morning, the lecture was moved to the sunlit Function Room in Corey Union.
Peach’s major function for the Federal Reserve Bank of New York is developing a forecast for the U.S. economy. Peach opened his remarks by razzing how today’s power outage drew a striking parallel to the challenges of being an economist, in that, to a certain degree, their projections are speculative due to the cyclical complexities of economic conditions.
“It’s unfortunate that we’re in the dark, but economists are always in the dark,” Peach quipped to a chucklesome crowd.
Peach briefly detailed the origins and history of the Federal Reserve, the central bank of the United States, noting there are twelve Federal Reserve Districts across the country—selected as major centers of commerce at the time of establishment—with the Federal Reserve Board of Governors in Washington, D.C.
Peach asserted the Federal Reserve was bore of a need for financial liquidity, rejecting the precursor financial product on Wall Street called “trusts,” whose overall value in the stock market proved to be depressive in nature.
“Someone had to step in to provide liquidity,but there wasn’t a central bank,” Peach said. “That’s when J.P. Morgan stepped in, and he provided the liquidity.”
Peach made it clear that the Federal Reserve is a system of private banks and not government-owned institutions, giving it a “unique” status.
“What a lot of people don’t understand is, is that these regional banks—these twelve regional banks—are privately owned corporations,” Peach said. “I work for the Federal Reserve Bank of New York. I am not a government employee.”
Peach discussed everything from recessions and depressions, inflation and interest rates, all the way to the somewhat murky nature of supply and demand.
The three primary components of the Federal Reserve System are Federal Reserve Banks, the Federal Reserve Board of Governors, and the Federal Open Market Committee (FOMC). The major functions of the Federal Reserve are: conducting the nation’s monetary policy, including employment, prices, and interest rates; minimizing and containing systemic risks in the U.S. and abroad; monitoring the impact of individual financial institutions; payment and settlement safety of U.S.-dollar transactions; and consumer protection and community development.