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Dollar named US currency
In the year 1785, the dollar was named the official US currency. -
First attempt at central banking
(1791-1811) Congress made the First Bank of the United States, located in Philadelphia Pennsylvania, thanks to the push of Treasury Secretary, Alexander Hamilton. -
Second attempt at central banking
(1816-1836) Congress created the second bank of the US, also in Philadelphia. In the year 1836, this eventually failed. -
Free Banking Era
(1836-1865) Banks, such as state chartered, or 'Free Banks' were able to give their own notes, which could be redeemable in gold/specie. Since the rising popularity of check transactions, the New York Clearinghouse Association was created in the year 1853 to help with the city's check exchange. -
A Bad Year
The New York Stock Exchange dropped 50%, therefore panic began and runs on banks occurred(Mid October, continuing for 3 weeks) -
Federal Reserve Created
On December 23rd, Woodrow Wilson signed a law passing the Federal Reserve System. This would provide a more stable, flexible and safe financial system. -
Beginning Of Open Market Operations
During WWI, the government saw the power of open market operations and its ability to influence the availability of credit in banking. (1920's) -
Market Crash/Great Depression
(1929-1933) In late 1929, the stock market crashed and America fell into a depression. A lot of people blamed the Federal Reserve for this. Many believed that the lack of understanding of monetary economics kept the Federal Reserve from implementing policies that could have lessened the blow of the depression. -
Changes Made to the Structure of the Federal Reserve
The government decided to add more structure to the federal reserve, which included the removal of Treasury Secretary and the Comptroller of the Currency from the board. This was called the Banking Act of 1935. -
The Treasury Accord
The Federal Reserve decided to commit to keeping a low interest rate on government bonds after the US joined WWII. The Federal Reserve was forced to give up many things including control of the size of its portfolio and also the money stock. -
Inflation and Deflation
(1970s-1980s) Producer and consumer prices rose in the 1970's, the oil prices skyrocketed and the lack of federal money more than doubled. Paul Volcker, a chairman of the federal reserve, was able to bring the inflation under control, though sadly his term was short. -
Longest Economic Expansion
On Oct 19 1987, the stock market crashed. The fairly new chairman of the Federal Reserve at the time, Alan Greenspan, issued a statement saying “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.”After this a long economic expansion began. the expansion came to an end in 2001. -
9/11
The true test to the federal reserve was when the September 11th terrorist attacks began. Following the attacks, the federal reserve lowered interest rates even more and loaned almost 45 billion dollars. -
Discount Window Operation Changes
The Federal Reserve altered its operations for financial institutions that go and borrow funds from the Federal Reserve, so that the rates at the window are above the current Federal Reserve funding rate and giving equal(or rational) loans through interest rates to banks. -
Financial Crisis and more
Due to low mortgage rates and the ability to access credit better, the demand for housing went up, which caused the prices for homes to skyrocket(in early 2000's). The demand for houses got an advance from mortgages tied together with securities, which were traded in financial markets. One thing led to another and the financial crisis began in 2007 and the US entered a time where economic activity was shrinking that December, called a recession.
