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The Making of The Federal Reserve and You

A Fresh Approach to Economic Education

Federal Reserve and You - CD Educating the public about what the Federal Reserve is and does, and why we do what we do, is one of our fundamental duties. If we don’t explain our essential role, who will?

Yet, it is a daunting challenge to explain the complex issues that led to the formation of the Federal Reserve and the complex processes it manages to seek the positive economic outcomes we all desire. Accepting this challenge led to a fresh approach in the making of The Federal Reserve and You interactive video.

The new video replaces a 12-year-old videotape called The Fed Today, but rather than producing another short linear film, the team chose to rethink the way video was used in the classroom. The result is a more interactive tool, with a menu-driven DVD and a matching video streaming website.

Above: Stills from the video highlight the interviews and animations included in it.

The Federal Reserve and You brings to life the important responsibilities of the Federal Reserve System and its essential role in the American and global economy. It is structured to have broad appeal, and its modular functionality enables a wide range of viewers — from high school students and teachers to consumers and business professionals — to tailor the use of the video to their own educational needs.

Whether the public, teachers, or students need a 24-minute overview of the Federal Reserve System, a two-minute primer on a specific aspect of monetary policy, or two and a half hours of material for a semester-long class, The Federal Reserve and You fits the bill.

Leveraging Educational Expertise

Economic education is nothing new for the Philadelphia Fed. The Bank’s economic education team, which is part of the Community Development Studies and Education Department, has a long history of working with educators. It holds several daylong and weeklong teacher-training programs annually and produces a wide range of educational materials and lesson plans, specifically for K-12 classrooms, on economics and personal finance.

“We strive to follow best practices in the field of economic education,” said Andrew T. Hill, Ph.D., economic education advisor at the Philadelphia Fed. “Video continues to be one of the most effective teaching tools inside and outside the classroom, and its influence is growing as interactive video and online video streaming make video content more accessible — and more powerful — than ever.”

Hill explained that the Philadelphia Fed had been responsible for distribution of VHS and DVD copies of the 13-minute video made in 1999, The Fed Today, which was hosted by former broadcast journalist Charles Osgood. While the video provided an overview of the Federal Reserve, it was missing the depth and details required to fully understand the functions of the Fed that affect our lives each day. A new video was needed to reflect the changes in the Federal Reserve and monetary policy in recent years and to help educators better meet state and national academic content standards.

So, Hill and his team seized the opportunity to spearhead a new educational video about the Federal Reserve System. Hill proposed a multiyear project to create the interactive video and led the effort from conception through distribution.

While the Bank’s economic education team assumed full responsibility for the video’s creation, the project’s goal was to represent all of the Fed. To achieve this, the team engaged Federal Reserve System economic education colleagues to arrange interviews with Chairman Bernanke and other leaders from the Board of Governors in Washington and Reserve Banks across the country to contribute their perspectives and commentary. The video also draws on footage and photos from other Reserve Banks. Accordingly, the end product is a tool that can be broadly used across the country.

Andrew Hill, economic education advisor
Above: Andrew Hill, economic education advisor, led the team that worked to produce the video.

Below: Stills from the video highlight the interviews and animations included in it.

Stills from the video

The video premiered May 8, 2013 before an audience of educators and others

“The interviews with the many leaders from across the System were integral in ensuring a well-balanced final product that serves teachers, students, individuals, and organizations nationwide. The Federal Reserve and You will, no doubt, become a useful resource for economic education across the country,” said Hill.

The video includes an overview of the Federal Reserve and a full chapter on money and banking, including basic information that consumers need, which helps the public better understand the role of the Fed.

The video also includes a full chapter on the history of U.S. central banking, which fits well with Philadelphia’s role as the home of the First and Second Banks of the United States and reminds viewers of the essential role a central bank plays in modern economies. The buildings that housed these two early attempts at central banking are just blocks away from the Philadelphia Fed.

Creating Compelling Content

Hill and the production team also selected two young actors to serve as the on-screen hosts, who walk viewers through the video from start to finish and explain the Fed in simple terms. Modern graphics, detailed animations, historical reenactments, and interviews with leaders from across the Federal Reserve System complement their dialogue, helping viewers to visualize and conceptualize the information. The young hosts help to ensure a more relevant product for high school students, yet they also appeal to a larger audience.

“Despite its complexities, learning about the Federal Reserve does not have to be difficult. With the right presentation tools and delivery format, learning should be engaging, effective, and even fun,” said Hill.

Even so, exploring all the important details of various facets of the Fed in easily understandable terms requires hours of explanation, making it essential that the economic education team carefully chart the content and its structure. As a result, The Federal Reserve and You is composed of seven chapters:

Chapter 1: The Federal Reserve and You

Capturing the core of the Federal Reserve System, this 24‑minute overview explains the Fed’s structure and the three areas in which it operates — payments, supervision and regulation of financial institutions, and monetary policy — as well as the two goals of Federal Reserve monetary policy: price stability and maximum employment.

Chapter 2: History of Central Banking in the United States

Historical reenactments bring the nation’s monetary and financial history to life as viewers journey through time to explore the creation of the First and Second Banks of the United States, the tumultuous nature of the nation’s financial system in the period between 1836 and 1913, the founding of the Federal Reserve, and its operations in key periods, including the Great Depression, the spiraling inflation of the 1970s, and the financial crisis of 2007-2009.

Chapter 3: Money and Banking 101

Encouraging viewers to think critically about the money they use every day, this chapter provides background on the basics of money and banking in the United States and delves into details about the money supply, the fractional reserve banking system, how money is created when banks make loans, the concept of price stability, and the causes and effects of inflation.

Chapter 4: Monetary Policy

This chapter explains how changes in the money supply can affect interest rates, and in turn, national economic goals of economic growth, price stability, and full employment. The discussion also explores the Federal Reserve’s monetary policy tools: open market operations, the discount rate, reserve requirements, and interest on reserves.

Chapter 5: The Payments System

This chapter looks at how the nation’s payments system facilitates everyday financial transactions and explores cash, checks, and the evolution of electronic payments over the past 20 years. It emphasizes the critical role that the System’s Fedwire service plays as the backbone of the U.S. financial system.

Chapter 6: Supervision and Regulation

Why and how does the Federal Reserve supervise and regulate thousands of financial institutions? This content provides important insight into the history and current state of supervision and regulation, including how Congress passes laws that affect financial institutions and how the Federal Reserve, in cooperation with other regulatory agencies, writes rules to implement those laws.

Chapter 7: A Baker’s Dozen: 13 Key Questions

This handy Q&A delivers quick answers to 13 questions about the Federal Reserve and economics, from “How does the Federal Reserve work for you?” and “What is GDP?” to “What are government securities?”

A Closer Look at Monetary Policy

The Federal Reserve and You dedicates nearly 20 minutes to monetary policy. One of the most detailed chapters, it covers the effects of changes in the money supply; price stability; monetary policy goals; the role of the Federal Open Market Committee (FOMC); open market operations; the discount rate; interest on reserves; reserve requirements; and monetary policy during turbulent times.

At a local level, the Bank’s Research Department plays a key role in monetary policy by gathering information about the Third District and the economy at large. Their work helps brief President Plosser before each FOMC meeting.

The department also publishes analyses of regional and national economic data, such as the Philadelphia Fed’s Business Outlook Survey, a poll of manufacturers in the Third District that has been conducted every month since May 1968. It has become one of the most widely followed regional surveys. Respondents provide data about business activity at their plants, including employment, working hours, new and unfilled orders, shipments, inventories, delivery times, prices paid, and prices received.

Philadelphia FRB Map

Andrew Hill (right), the producer of The Federal Reserve and You, and the film's director, Bob Noll (left), interviewed Chairman Ben Bernanke (center) inside the board room of the Board of Governors in Washington, D.C.
Andrew Hill (right), the producer of The Federal Reserve and You, and the film’s director, Bob Noll (left), interviewed Chairman Ben Bernanke (center) inside the board room of the Board of Governors in Washington, D.C.

Pictured at the premiere of the The Federal Reserve and You are (left to right) Andrew Hill; President Charles Plosser; Jimmy Brooks, Jr., actor; Theresa Singleton, vice president, Community Development Studies and Education; Bob Noll; and Milissa Tadeo, senior vice president, Corporate Affairs.

Each of these chapters contains various shorter segments that explain specific aspects of the larger topic. The DVD and the streaming video site allow viewers to watch entire chapters or to play one segment at a time. This creates maximum flexibility for teaching and learning about the Federal Reserve. Teachers can easily combine specific content areas from portions of the video or full chapters into their lesson plans at various points in the curriculum.

This flexibility also expands the video’s functionality, since it can be used in various academic content areas beyond business or economics. For example, social studies classes can benefit from learning about the history of central banking in the United States, from the establishment of the First Bank, proposed by Alexander Hamilton in 1791, to the financial crisis of 2007-2009. Family and consumer science classes will find value in the segments about money and banking.

Hill added, “We have created a multipurpose video that can be used well beyond the classroom. Individual consumers, consumer groups, and business groups can all use this resource to learn about the Fed.”

Bottom left: Pictured at the premiere of the The Federal Reserve and You are (left to right) Andrew Hill; President Charles Plosser; Jimmy Brooks, Jr., actor; Theresa Singleton, vice president, Community Development Studies and Education; Bob Noll; and Milissa Tadeo, senior vice president, Corporate Affairs.

A Closer Look at Payments

The Federal Reserve and You explains how the Federal Reserve plays an important role in various forms of payment, including familiar currency, coin, and paper checks, as well as electronic payments, such as the automated clearing house (ACH) used by businesses and consumers, and the Fedwire services used by financial institutions.

In the Third District, the Philadelphia Fed is advancing its work in payments on several fronts. The currency counting division of the Bank’s Cash Services Department continues to execute the national multiyear strategic plan to upgrade all electronic sensors that authenticate currency to keep pace with advancements in technology and the new designs of U.S. currency.

In 2012, the Bank’s Payment Cards Center marked its 12th year of promoting a deeper understanding of consumer credit and payments. The center hosts seminars on the use of payment cards and related economic and policy issues and frequently represents the Philadelphia Fed at industry and policy events focused on payments. Combining this industry involvement with extensive research, the center remains a well-respected source of information and insight into payments.

Keeping Current

The Federal Reserve and You, which has been more than two years in the making, was designed in a segmented format, with production elements that lend themselves to updates in the years to come. Rather than overhaul the entire video as the Fed and the financial landscape continue to evolve, the economic education team can edit or add individual sections of content as the need arises.

The video’s online distribution on the Philadelphia Fed’s website (www.philadelphiafed.org/the-federal-reserve-and-you) lends itself to accommodating these updates. The video is also available in traditional DVD format. The Philadelphia Fed’s economic education team plans a series of approximately 30 lesson plans to accompany the majority of the segments. These lesson plans will also help ensure that the video project remains timely and that teachers have great resources for teaching about money, banking, and the Federal Reserve.

Hill concluded, “The Federal Reserve and You will also serve a variety of functions as video material is put to additional uses. For instance, the Philadelphia Fed has already integrated portions of the video about inflation into an element of its Money in Motion exhibit.” He added that the project team is embarking on promotional efforts to include social media and other public relations activities to generate awareness of the video, which will help the public understand the role of the Federal Reserve as it approaches its centennial at the end of 2013.

Key team members who worked on the project behind the scenes include (from left): Jim Ely, Todd Zartman, Hilda Guay, Christian Lepore, Melissa Kinney, and Sally Burke.

A Closer Look at Supervision and Regulation

In the chapter about supervision and regulation, The Federal Reserve and You examines how the Federal Reserve works with other federal and state agencies to supervise and regulate the nation’s financial institutions. The video explores the history of the Federal Reserve in supervision and regulation, the role of Congress in this area, and how bank examiners do their work

Members of the supervision and regulation staff appearing in the video (from left): Ken Benton, Jennifer McCune, Carole Foley, Barry Cutler, and Christopher Hahne. Members of the supervision and regulation staff appearing in the video (from left): Ken Benton, Jennifer McCune, Carole Foley, Barry Cutler, and Christopher Hahne.

The Philadelphia Fed has made significant contributions to the Federal Reserve’s supervision and regulation initiatives through its work on several System programs. The Bank’s supervision and regulation staff led the System’s model validation efforts, which help ensure the quality of supervisory models used in stress testing the nation’s largest financial institutions.

The Federal Reserve System also continues to rely on the Risk Assessment, Data Analysis, and Research (RADAR) group, which the Philadelphia and Kansas City Feds created to optimize the use of data to monitor financial risks. RADAR consists of a data warehouse, a central facility that stores consumer credit data — including information about credit cards, auto loans, student loans, mortgages, and more — and enables authorized users throughout the System to access this information for bank surveillance and related activities. The Philadelphia Fed supports this tool with a team of experts who ensure the quality of the data, answer questions from analysts throughout the System, and assist bank examiners and Fed market analysts in evaluating the securities positions of financial institutions.