The Federal Reserve

The Federal Reserve's 28 October 2026 statement kept the target range at 3-3/4 to 4 percent. The vote was 10-2: Lisa Cook and Beth Hammack dissented, each preferring a quarter-point increase. The statement said inflation remains elevated, activity is expanding at a strong pace, and the Committee is maintaining ample reserves. Source: Federal Reserve, 28 Oct 2026.

• CPI rose 0.6% in September (seasonally adjusted) and 3.7% over twelve months; core CPI rose 2.6% over twelve months. Source: BLS, released 14 Oct 2026.
• Unemployment was 4.2% in September, up from 4.1% in August, with payrolls up 29,000. Source: BLS Employment Situation via Trading Economics, 2 Oct 2026.

In Trump v. Cook, decided 29 June 2026, the Supreme Court voted 5-4 to deny the administration's request to pause a lower-court order blocking Cook's removal. She remains a governor while litigation continues, and the Court did not decide the wider question of presidential removal power over Fed governors. Sources: Axios and Commercial Observer, 29 June 2026.

Press reports state Kevin Warsh was sworn in as Fed Chair on 22 May 2026 for a term running to May 2030. Source: Crypto Briefing, summarizing Fed coverage, mid 2026.

Fed total assets were $6.749T on 5 August 2026 and about $6.75T on 28 October 2026, little changed since quantitative tightening ended in December 2025. Reserve management purchases of Treasury bills were cut from about $40B to $10B a month, then halted from 14 August to 14 September 2026. Warsh has said he favors a smaller balance sheet, and a review of the reserve framework is under way. Sources: Federal Reserve H.4.1, 29 Oct 2026; Wolf Street, Aug 2026; PrimeXBT, Aug 2026.

Trackers put total stablecoin supply at a record near $322B in May 2026 and about $308B in August 2026, with Tether near $187-189B and USDC near $76-78B. Sources: KuCoin News and Datawallet tracker summaries, mid 2026.

Not refreshed: the Treasury flow chart, the r-star series, the FedNow bank count, the 57% dollar reserve share, the $30.7T Treasury market size, the CBO debt path, the Warsh confirmation tally, the CPI and unemployment history chart (ends 2025), and the stablecoin ranking chart (June 2026 CoinMarketCap data). The September 2026 rate move to 3.75%-4% was reported only by secondary sources.

• Monetary policy: steer rates and the money supply to hit the dual mandate.
• Financial stability: act as lender of last resort; contain systemic risk.
• Bank regulation: supervise and stress-test the banking system.
• Payments: run the rails that clear trillions of dollars a day.
• Consumer protection: police a fair, transparent financial marketplace.

For 137 years America treated a central bank as a threat to liberty, until a market collapse every fifteen years made the cost of not having one impossible to ignore.

The Fed was not designed on a blackboard. It was forced into being by the Panic of 1907.

1. 1791The First Bank: Hamilton wins; a 20-year charter opens in Philadelphia.
2. 1811Charter lapses: Congress refuses to renew; the experiment ends.
3. 1832Jackson's veto: the Second Bank dies; deposits move to state banks.
4. 1863National Banking Act: Lincoln unifies the currency, but panics persist.
5. 1907The Panic: markets fall ~50%; J.P. Morgan backstops the system by hand.
6. 1913The Federal Reserve: Jekyll Island's hybrid design becomes law.

Between 1837 and 1863 the U.S. had no central bank. Each state-chartered bank issued its own notes, which traded at a discount that depended on the issuer's solvency and how far you were from home. Merchants needed printed guides just to know what a dollar was worth.

1. WWI, 1917Rates pegged low to fund the Treasury; independence surrendered.
2. Depression, 1930sFails as lender of last resort; a third of banks collapse.
3. 1935 ActReforms forge one unified national institution.
4. 1951 AccordAfter another wartime peg, it wins operational independence.
5. Volcker, 1979-8719% rates break inflation; credibility becomes the asset.

The Fed does not set your mortgage rate. It sets one overnight rate between banks, and lets the market carry it to everyone else.

Eight times a year the FOMC picks a target range; a handful of administered rates keep the market inside it.

The chart plots the Fed funds target rate from 1979 to 2026 (FRED, federal funds effective rate). It peaks near 19% under Volcker, glides down through the Greenspan years, sits at zero for most of 2008-2015 and again in 2020, then rises in the fastest hikes in forty years.

1. ON RRP (lowest): the sub-floor for money funds.
2. IORB: the reserves floor.
3. Fed funds effective: the market rate.
4. Discount rate (highest): the ceiling, the window.

1. The Fed's rate: the FOMC sets the fed funds target range.
2. Bank funding: banks' cost of overnight money moves with it.
3. Everyday credit: mortgages, auto loans, credit cards and corporate bonds reprice.
4. Spending & hiring: households and firms borrow, invest, or pull back.
5. Jobs & prices: output, employment and inflation respond, on a long lag.

When rates hit zero in 2008, the Fed stopped changing the price of money and started changing its quantity.

That emergency improvisation, quantitative easing, became a permanent feature of the financial system.

The chart plots Fed total assets from 2004 to 2026 (FRED). The balance sheet rises from under $1 trillion after 2004, steps up after the 2008 programs, peaks near $9 trillion in 2022, and settles at about $6.7T by late 2026.

From early 2020 to early 2022 the Fed bought Treasuries and mortgage bonds on a scale never attempted before. It likely averted a depression, and helped drive inflation to a 40-year high of 9.1% by mid-2022, which forced the fastest tightening cycle since Volcker.

Congress gave the Fed two jobs that often pull in opposite directions, full employment and stable prices, and a single dial to do both.

When they conflict, there is no formula. There is only judgment.

The chart plots U.S. inflation (CPI) and unemployment from 1965 to 2025 (BLS; FRED). Inflation and unemployment both climb through the 1970s (stagflation), both ease in the 1990s-2000s, and inflation spikes again in the early 2020s.

It has no basis in economic theory. It began as an offhand remark by New Zealand's finance minister in the late 1980s and became the global standard within a decade. The Fed made it explicit only in 2012.

• The dial: one instrument, two targets, usually complementary, sometimes at war.
• FAIT, 2020: 'average' inflation targeting let inflation run hot to offset past misses.
• The trap: when prices surged in 2021, the framework delayed the response.
• Forward guidance: promising a rate path can box the Fed in; Warsh scrapped it in 2026.

The President cannot fire the Fed Chair over a rate decision. And yet every Chair tested by a President has, at some point, bent.

The Fed's independence has never rested on its statute. It rests on a norm, and norms can break.

1. Larger federal deficits
2. Higher interest & refinancing costs
3. Pressure to print (QE)
4. Sustained inflation
5. Higher rates feed back

• A closed probe: a 2026 criminal investigation over a $2.46B HQ renovation, dropped in April.
• A Supreme Court test: the attempt to fire Governor Cook, the first test of 'for cause' in 112 years. On 29 June 2026 the Court ruled 5-4 that she stays in office while the case continues; the broader removal question is unsettled.
• Open demands: an administration publicly pressing for rate cuts.
• The real pressure: structural, the sheer size of the federal debt.

The Fed's plumbing and its politics are being rebuilt at the same time: new rails, digital dollars, and pressures the 1913 design never anticipated.

The tools that carried it through 2008 and 2020 may not fit the next crisis.

• No public CBDC: a Jan-2025 order halted U.S. work on a retail digital dollar.
• 146 countries exploring: the U.S. is the loudest holdout among major economies.
• Stablecoins fill the gap: roughly $310-320B of privately issued dollar tokens circulate.
• The GENIUS Act, 2025: the first federal rulebook for stablecoin issuers.

A central bank has no army and no budget. Its only real asset is a promise, that when politics demands cheap money, it will, when it must, say no. Every dollar in your pocket is worth something because, so far, that promise has held.

1. Panics built the Fed: 137 years of resistance ended only when chaos became unbearable.
2. One rate, whole economy: the Fed's power runs through a single overnight number and its credibility.
3. The balance sheet is permanent: emergency tools from 2008 and 2020 never fully unwound.
4. Independence must be re-chosen: every Chair faces a President; the guardrail is norm, not statute.
5. The next test is fiscal: a debt heading past 150% of GDP is the pressure that could bend the Fed.

• Federal Reserve: FOMC statements, policy tools, and Fed History resources.
• FRED, St. Louis Fed: federal funds rate and balance-sheet series.
• Federal Reserve Bank of New York: Laubach-Williams r-star estimates.
• Congressional Budget Office: long-term federal debt projections (2025).
• Bank for International Settlements; Atlantic Council: CBDC and coordination.
• CoinMarketCap; U.S. Treasury (TIC): stablecoin caps and Treasury flows.
• Barclays; Bloomberg; Gallup; BLS: drawdowns, votes, and macro data.
• Figures marked 'est.' are compilations of the above.