On Friday, 23 March, 2007, 18 enthusiastic ECBU majors traveled to Richmond to tour the Richmond Federal Reserve Bank and to talk with Ray Owens, an economist working for the Fed. The trip was part of Col. Gutermuth’s Money and Banking course, which covers the Federal Reserve System in detail. This was the second trip VMI has made to the Richmond Federal Reserve Bank. ODE and SBD made a similar trip in the fall.
Since 9/11, security has been very tight at the Fed, so only certain areas were available for viewing. The law enforcement center there watches every area of the bank with cameras feeding live video in the main control center. Security guards are everywhere, and accompanied us for part of the tour. Interestingly, these security officers are similar to federal agents in that they can be sent to any one of the 12 district banks across the country (or their branches) and have the same authority regardless of location. The Richmond Fed actually sent some of its officers to New Orleans after Hurricane Katrina to maintain security there.
One of the most interesting areas in the bank was the “cash area” where millions and millions of dollars pass through every day. Bills are checked for rips, writing, tape, and level of cleanliness and pulled from circulation if not “up to snuff”. They are counted, bundled, and sent either to the massive vault deep within the bowels of the bank, or sent off to commercial institutions via armored cars.
We were allowed into the board room and sat around the horseshoe-shaped table just as the directors might do during one of their meetings. (Cadet Fredericks sat in the president’s chair, and several cadets almost tipped over backwards in the cushy seats!) We learned how the meetings are conducted and what types of people serve as directors of the district bank.
Amanda Gibson, one of the tour guides, explained that employees of the Fed are NOT federal government employees. But they do enjoy lots of benefits, including a dining area overlooking the city and the James River. Employees also have access to a superb work out center, where they can take a break during the day to exercise. They even have a health center to provide basic medical care during working hours. A great place to work for anyone looking to change jobs!
The actual tour of the Fed lasted an hour. The group then met with Dr. Owens who explained what the Fed does and its changing philosophy about what policies the Fed should follow. Having worked for the Fed for over 20 years, he explained how, over time, the Fed has had to adjust to the ever-changing forces affecting our economy. I was personally surprised to learn that the Fed no longer targets monetary aggregates (M1, M2, etc.) due the difficulties in measuring “money”. Rather, the Fed targets interest rates without necessarily worrying about the actual supply of money. He explained it as “only worrying about the vertical axis and disregarding the horizontal axis”. Some of you econ majors will know what this means!
So, while detailed maps and directions were provided to the cadets, and yet some still ended up on the other end of Richmond for a while, everyone arrived safely, had a fun and informative tour, and then (most) headed off for an extended weekend, spent studying, I’m sure.