Mises Daily Articles
Anatomy of the Fed
I am pleased to announce that I will be teaching another installment of the Mises Academy online class Anatomy of the Fed. This class will cater to both the undergraduate student and the seasoned Wall Street executive. This was one of the most popular classes the first time we offered it in early 2011.
The Scope of the Course
This session of the Fed course runs for eight weeks, from June 25 through to August 19. The goal of the class is to provide a solid introduction to both the theory of free-market versus cartelized central banking and the day-to-day mechanics of the Federal Reserve in action.
After explaining how money and banking would develop in a free-market economy, we will explain central banking from a theoretical perspective. Specifically, we will see that central banking — that is, a government-sponsored cartel of banks with one privileged bank sitting atop the pyramid — serves to circumvent the market's natural checks on credit expansion. In addition to increasing the money supply and prices, central banking also fosters the boom-bust cycle.
After reviewing the theory of free versus central banking, we will explore the historical origins of the Federal Reserve. We will study the institutional structure of the Fed and learn how to read its balance sheet in real time. We'll walk through conventional and unconventional Fed operations, studying not just the theory but also the implementation. (For example, exactly how does the Fed go about buying an extra $600 billion in Treasury securities? Are the cuddly bears being paranoid or not?)
Finally, we'll wrap up the course by connecting the operations of the Fed — and its predecessors — with financial crises from US history. These will include the Fed-induced crises of the Great Depression and the housing bubble, but also earlier panics attributable (at least partially) to the swings in credit engineered by earlier incarnations of the US central bank.
Structure of the Course
In a typical week of the course, I will give a live video broadcast on Monday from 6:30 to 8:00 p.m. (EDT). I will spend the first 75 minutes lecturing on that week's material, we'll take a quick break, and then I will field questions from students for the remaining time. In addition, on Saturday I will have optional "office hours" (exact time to be determined), meaning that I will be available on a live-video broadcast to answer questions from any students who decide to tune in.
Note that the Saturday sessions are purely for the students' convenience and are not mandatory. Also, all broadcasts will be recorded and available to enrolled students, so that people who have a scheduling conflict can still take the class if they wish.
If a student wishes, he or she can simply "audit" the class. This was a popular option for many adults who took my business-cycle class, because they had busy work schedules and would watch my lectures but couldn't keep up with the reading.
However, students may also take the class for a grade. These students will take a multiple-choice quiz each week, in addition to an exam at the end of the class. Although the Mises Institute is not accredited, we will present certificates of completion and a formal grade at the end of the class to those students who desire it.
Whether you are a college freshman or a bond trader, you will leave this course with a much better understanding of both the theory and practice of the Federal Reserve. Or perhaps you can't decide on a birthday gift for that special someone who needs to learn that the Fed is not our friend. Either way, I encourage you to enroll quickly. I hope to see you in June!