After all, it is the liquidity of US Treasury bonds that makes them the world s leading reserve asset.

With its benchmark lending rate at the zero bound, the Fed has embraced a fundamentally different approach in attempting to guide the US economy.

Federal Reserve Chairman Ben Bernanke and his colleagues are determined to keep inflation low as the economy recovers.

The Fed has two main responsibilities macro level regulation aimed at ensuring full employment, output growth, and price and financial stability and micro level regulation aimed at financial markets.

The Board is of the view that the creation of an operating reserve would be prudent and notes that the level of the reserve could be increased within an appropriate time frame.

This represents a slight decrease in liquidity, primarily due to higher cash outflows on deliveries and the increase in the operational reserve level.

I am puzzled, and frankly appalled, by the Fed s failure to explain how it will restore its balance sheet to a non inflationary level.

Does the Fed really want to increase annual inflation to 2 , such that the price level of the country will increase by more than 700 over the next century? Is that what Congress had in mind when it tasked the Fed with achieving stable prices ?

Recently, the Fed expressed its intent to keep policy rates low for a long time until employment picks up strongly.

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Simply put, the global economy has at its center a dysfunctional political regime that generates recurrent threats of default on the world s major reserve asset.

The Fed Trap

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Reserve Reform

THE YEXECUTIVE COMMITTEE OF THE HIGH COMMISSIONER'S PROGRAMME

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(f) Operating reserve

The Fed, of course, has been forced to turn to QE, as traders call it, because its normal tool for fine tuning inflation and growth, the overnight interest rate, is already zero.

Such lessons are most obviously relevant to the current competition to succeed Ben Bernanke as Chair of the US Federal Reserve Board, the world s most powerful monetary authority.

The average interest rate paid for overnight reserves in the US has been well below the 5.25 per year that the Fed still publicly says is its target.

The Fed s Culture War

Fighting the Fed

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The Federal Reserve and the Currency Wars

The Federal Reserve s Relevance Test

The Impotence of the Federal Reserve

And, in the United States, where inflation exceeds 2 , the Federal Reserve s benchmark federal funds rate remains at an historic low of 0 0.25 .

The Fed Under Fire

The Fed s Communication Breakdown

The Federal Reserve s Escape from New York

The Fed s Dollar Distraction

The Fed Sets Another Trap

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Fed Up with the Fed