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The Federal Reserve & Economic Theories

From 1935 to the present, the decision-making structure of the Fed has been the Federal Open Market Committee (FOMC), a body which is composed of the seven-member Federal Reserve Board, and five of the 12 Federal Reserve Bank presidents (Timberlake). Members of the board are appointed by the President for fourteen- year terms. The terms are staggered, with a vacancy occurring only every other year, so no president can unduly influence the board. Resignations and deaths can increase the frequency of appointments, but not on a regular schedule. The presidents of 11 of the 12 Federal Reserve Banks take turns being on the FOMC, with the president of the Reserve Bank of New York being a permanent member. The reserve bank presidents are elected to office by their boards of directors, and reach the office by working their way up through the officer staffs of the reserve bank organizations. The main difference between the presidents of reserve banks and the board members is that the former are essentially heads of quasi business organizations and not constantly involved or concerned with monetary policy. In practice, the board generally defines monetary policy in the FOMC, and the bank presidents go along with the expertise of the board. This reflects that fact that monetary policy is set in Washington, which was not the intent of the original Fe


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The Federal Reserve & Economic Theories. (1969, December 31). In Retrieved 14:01, October 24, 2014, from
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