548548 Chapter 15 | Economic Policy- managing government accounts and the public debt;
- supervising national banks and thrift institutions;
- advising on domestic and international financial, monetary, economic, trade, and
tax policy; - enforcing federal finance and tax laws; and
- investigating and prosecuting tax evaders, counterfeiters, and forgers.^30
Some of these responsibilities overlap with the Fed’s, especially supervising
banks and managing the public debt. In most instances the responsibilities are
complementary rather than competing, such as the management of currency and
coins: the Treasury produces currency at the Bureau of Engraving and Printing (about
25 million bills are printed every day) and coins at the U.S. Mint (which made just over
14 billion coins in 2017), and the Fed distributes them to member banks.^31 Financing
federal debt is another matter. The Treasury generally prefers lower interest rates to
keep down the cost of financing the debt and to promote economic growth, whereas
the Fed is concerned about keeping rates high enough to avoid inflation. Therefore,
the Fed and Treasury must often coordinate their policies to avoid working at
cross-purposes.How Economic Policy Makers Interact: The 2008 Economic Crisis
A dramatic example of cooperation between the Fed and Treasury is the 2008
economic crisis. Problems in the subprime, or high-risk, mortgage market; the
collapse of housing prices; and the tightening of credit markets had been putting
pressure on the economy through the spring and summer. The first sign of serious
trouble came in March 2008 when the New York Federal Reserve made a loan of $30
billion to JP Morgan Chase to facilitate the buyout of Bear Stearns, an investmentDuring the financial crisis of
2008–2009, the government had to
take unprecedented action to avoid an
even deeper crisis. Here, then–Senate
Majority Leader Harry Reid (D-NV)
speaks to reporters. He was joined by
other congressional leaders and Ben
Bernanke (far right), who was Federal
Reserve chairman at the time.Full_16_APT_64431_ch15_530-571.indd 548 15/11/18 2:34 PM