What is the organ of the Fed that effectively runs the monetary policy? Yes,
there is the Board of Governors, yes, there is a Chairman of the Fed, but
which organ really runs the show? (1 point) Hint: FOMC. Hint because, you know if you miss this,
you will miss the entire assignment.
• Describe the composition of that organ. (2 points)
The answer to the question of “is the FED public or private” is right
there. Focus on the make up of that committee.
Who are the voting members of that body?
What I mean is:
That committee has X voting members. (I call this step as C)
Where do these members come from?
Who are they (I don’t mean their names)? There are specific definitions of
who can be considered for membership to that committee.
Go one step back.
Before they could be considered for membership on that committee, they
have to be elected as something. (I call this step as B)
How are they elected to be that something?
Who elects them? Who votes for them? (I call this step as A)
In STEP A, certain groups vote to elect “somethings”.
In STEP B, those elected “somethings” are considered for membership in
that super important committee.
In STEP C, from those elected “somethings”, some are selected as voting
members of that critical committee.
Again, the answer to the question “is the FED public or private?” goes back
to STEP A. If you look at STEP A, you will see the answer.
• What is the point of this exercise? Why are we doing this?
The Fed is supposed to run the monetary policy for the entire nation. A
frequent criticism towards the Fed is that it does not always run the
monetary policy for benefit of the entire nation, but for the benefit of certain
groups, for instance, for the benefit or the financial industry alone.
Sometimes, some policies that benefit one particular industry might be
against the overall well-being of the national economy. For example, if you
get rid of the FDA, it would be wonderful for the pharmaceutical industry.
They can save millions of dollars per year in costs, and their profits will
increase tremendously. But, at the same time, it could result in massive
number of deaths due to poisonings from unregulated medicines and
malfunctioning medical devices, etc.
When you look at to the composition of that committee which really runs
the show, do you see any room for such an undesirable bias towards one
Is the make-up of that important organ running the monetary policy
balanced enough between private interests and national interests?
This is the main point of the assignment, again:
Is the make-up of that critical body (the body which effectively runs the monetary policy—
see hint above) adequately balanced between private interests (the benefits of
a certain group, for example, the benefit of the financial industry) and the
national interests (the well-being of the entire economy)?
When you look at the vote count in that committee what do you see
between public and private interests?
After studying the composition of that critical organ (again, carefully looking
at Step A), what are your views on the potential of bias in the policies of the
Fed? Which way does it tilt, if any? Discuss.
PS 1 I know it is not very clear, but being able to understand the point is part of this assignment.
PS 2 Remember, we have 1 + 2 = 3 points for the two questions in the beginning, the remaining 17
points is for your discussion.
Absolutely no late submissions will be accepted.
The essay should not be longer than 3 pages (max.), double spaced, 12 pt. font.
Professional quality is a must. You are seniors! It should have no grammatical errors or
typos. I will stop reading if the paper has such errors. Suppose you are writing this to a
bank manager or a vice president of a company who is going to hire you. It should be
your best work.
You should use an impersonal tone in writing. It should read like the textbook. The tone
must be factual, dry and impersonal. Nothing about I, me, my. Nothing about I think, I
feel. Instead use phrases like “It can be argued”, “some might argue” etc.
It should be your own work, your own sentences. You are submitting it on Bb and it runs
through Turnitin to check for plagiarism. Plagiarism is a serious violation of Student
Code of Conduct. Please refer to ASU and COB Student code of conduct.
There is no right or wrong answer for this assignment. I will grade two things:
1. I will grade the quality of your writing; grammar, etc.
2. I will grade the quality of your arguments. When you claim something, when you
make an argument, imagine me arguing against it, imagine me making a point to
counter it.
Let me know if you have any questions. Good luck.

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