Lifting the Veil: Insight Into the Federal Reserve System

Alison South Blog

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Inflation is top of mind for anyone, especially employers who want to keep their team intact. Last Tuesday, I had the honor of learning about our nation’s Federal Reserve System, specifically our region, the sixth district. I learned from Ginger Martin, a director at the Miami branch, as part of a resource talk for the Executive’s Association of Fort Lauderdale.

In many cases, the Federal Reserve System is your bank’s bank.

The Miami branch has seven members, two of which are bankers and the other five represent members of the community.

The Federal Reserve System has a decentralized system, meaning the branches feed information to headquarters and each piece of information provided is equally valuable.

There are twelve districts in total. As residents of Florida, we’re in the sixth district which is headed up in Atlanta:

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Source: https://www.atlantafed.org/-/media/documents/education/teach/infographic-posters/the-fed-explained.pdf

Dr. Raphael W. Bostic was appointed President of the district in 2017. He’s approachable, very down to earth and a humble leader. He learns a fun fact about each and every person he leads. Ginger Martin’s fun fact is that she climbs mountains to raise money to end human trafficking!

Here’s an understanding of Dr. Bostic’s stance:

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Source: https://www.atlantafed.org/about/atlantafed/directors/about-the-directors.aspx

Did you know that the Federal Reserve System has more people with a doctorate degree than any other government system?

There is a Board of Governors for the Atlanta Federal Reserve that the POTUS nominates, and Congress approves. These are the people responsible for decisions on interest rates and monetary policy. They foster wire transfers and regulate the holding companies that banks use to facilitate transfers. These people are responsible for maintaining financial stability for the world! Here’s the $100 trillion global economy in one chart:

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Source: https://www.visualcapitalist.com/100-trillion-global-economy/

It’s interesting to note that even the country of Russia has a bank account with the Federal Reserve System. That account was frozen when they chose to invade the country of Ukraine.
It’s also the bank for the U.S. treasury. Here’s a graphic about the Functions of the Federal Reserve:

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Source: https://www.atlantafed.org/-/media/documents/education/teach/infographic-posters/the-fed-explained.pdf

They have a dual mandate
#1: Price Stability (a.k.a. inflation)
It’s safe to say that inflation is totally out of control and everyone can see that. The target is a 2% average and we’re clearly far over that right now.

#2: Maximum Employment
This mandate has no target. Ginger mentioned and I concur, most employers can not get the workers they need right now.

The Federal Reserve System is completely non-partisan. They have nothing to do with taxes or government spending.

One thing that’s innovative and interesting about our particular district, headquartered in Atlanta, is that they have an initiative called REIN which stands for Regional Economic Information Network. In this effort, all branches of the sixth district gather information from local businesses. This provides real-time- boots on the ground information vs. information from only Fortune 500 companies. Why you might ask? Well, the data provided by economists is lagged compared to metrics provided by REIN.

As the President of American National Bank, Ginger has always asked her clients, "How’s business?" Since taking the seat on the Federal Reserve System, Ginger has become more granular in her inquiry, asking:

"How’s your supply chain?"
"How’s hiring?"
"How is your revenue increasing?"

Which leads to...
-> "Is revenue increasing because your pricing has increased?"
-> "Or is revenue increasing because of volume?"