Independent Treasury

Examples of Independent Treasury in the following topics:

• Chapter Questions

  • Treasury increases its deposits at the Federal Reserve.
  • Treasury changes the taxes or changes its borrowing behavior.
  • Treasury Department are independent.

• The Federal Reserve System's Structure

  • The Comptroller of the Currency and Secretary of the Treasury cannot be members of the board because the Federal Reserve must remain independent of the U.S. federal government.
  • Please do not think the Fed is entirely independent!
  • Treasury.
  • Thus, the Fed would not be independent from U.S.
  • Treasury if it buys new securities in the primary market.

• Does U.S. Treasury Affect the Monetary Base?

  • Treasury Department.
  • Treasury.
  • Treasury T-accounts below:
  • Treasury are independent.
  • Central banks are not independent from their finance ministries in developing countries.

• Is the Federal Reserve Independent of the U.S. Government?

  • The Fed is independent of the U.S.
  • Treasury Office, even though some Presidents tried to influence it.
  • Treasury department can finance the deficit by issuing T-bills.
  • Consequently, a government would suffer from a budget deficit that its treasury can finance by selling government bonds.
  • Subsequently, the Federal Reserve would lose its independence.

• Monetary Policy and Fiscal Stabilization

  • Treasury borrow money at low interest rates.
  • Later, when the government sold large amounts of Treasury securities to finance the Korean War, the Fed bought heavily to keep the prices of these securities from falling (thereby pumping up the money supply).
  • The Fed reasserted its independence in 1951, reaching an accord with the Treasury that Federal Reserve policy should not be subordinated to Treasury financing.

• Structure of the Federal Reserve

  • The Federal Reserve System (The Fed) was designed in order to maintain the central bank's independence and promote decentralized power.
  • The Federal Reserve (the Fed) was designed to be independent of the Congress and the government.
  • The presidentially appointed Board of Governors (or Federal Reserve Board), an independent federal government agency located in Washington, D.C.
  • Treasury, and each has its own nine-member board of directors.
  • It operates independently, and is not subject to political pressures directly as is Congress or the President.

• Treasury Stock

  • Treasury stock is the corporation's own capital stock it has issued and then reacquired.
  • However, firms may reissue treasury stock without violating the preemptive right provisions of state laws; that is, treasury stock does not have to be offered to current stockholders on a pro rata basis.
  • Treasury stock can be accounted for using the cost or par value methods.
  • When the treasury stock is sold back on the open market, the treasury stock account is reduced (credited) for the original cost and the difference between original cost and sales price is debited or credited to a treasury stock paid in capital account, which is also disclosed in the equity section of the balance sheet.
  • Distinguish between the cost method and the par value method of recording treasury stock

• The Common Financial Instruments

• The Budgeting Process

  • Treasury Department.
  • Non-defense discretionary spending is used to fund the executive departments (e.g., the Department of Education) and independent agencies (e.g., the Environmental Protection Agency), although these do receive a smaller amount of mandatory funding as well.
  • The United States public debt is the money borrowed by the federal government of the United States through the issuing of securities by the Treasury and other federal government agencies.
  • Debt held by government accounts or intragovernmental debt includes non-marketable Treasury securities held in accounts administered by the federal government that are owed to program beneficiaries, such as the Social Security Trust Fund.
  • Debt held by government accounts represents the cumulative surpluses, including interest earnings, of these accounts that have been invested in Treasury securities.

• The Yield Curve

  • Sometimes, treasury bond yield averages higher than that of treasury bills (e.g. 20-year Treasury yield rises higher than the three-month Treasury yield).
  • As a result, the supply and demand in the markets for short-term and long-term instruments is determined largely independently.
  • However, because the supply and demand of the two markets are independent, this theory fails to explain the observed fact that yields tend to move together (i.e., upward and downward shifts in the curve).