Unhedged What’s a central bank supposed to do?
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Sep 4, 2025 
Brendan Greeley, a former Financial Times reporter and current PhD candidate at Princeton studying finance history, joins the discussion about the evolving role of central banks. He delves into the historical pressures faced by the Federal Reserve, particularly during political tensions, and emphasizes the delicate balance of maintaining independence. Greeley shares fascinating insights on the Fed's accountability, critiques surrounding its policies, and wraps up with a light-hearted glimpse into his forthcoming book on the future of the dollar.
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Fed's Original Mission Was Liquidity
- The Federal Reserve was chartered to provide flexible currency and seasonal liquidity to country banks.
- Its initial mission was to act as a liquidity provider, not a rate-setter or unemployment guardian.
1907 Panic Sparked The Fed
- The 1907 panic saw J.P. Morgan act as lender of last resort and exposed the need for a central bank.
- That crisis directly led to the creation of the Federal Reserve to fix seasonal liquidity problems.
1930s Recast The Fed As Political Actor
- The Fed's role expanded politically during the 1930s to be answerable to Congress and support policy goals.
- Under Mariner Eccles the Fed shifted to active political roles, including supporting wartime financing.
