On the 23rd of December 1913, the then American president, Woodrow Wilson, signed the document creating the Federal Reserve System.
Since then the Fed, as it is commonly known, has become the most powerful financial institution in the world.
The great depression of the 1930s, ‘the greatest economic disaster in US history’, according to the current Fed Chairman Ben Bernanke, was one of the institution’s darkest hours.
It kept a tight monetary policy leading to a drop in prices, production and employment.
Then came the financial crisis of 2008.
Lehman Brothers filed for chapter 11 bankruptcy, with debts of over 600 billion dollars – the largest in history.
Fed Chairman Ben Bernanke has since then followed a policy of quantative easing, basically putting more money into the economy.
And the results speak for themselves.
In 2007 the Fed owned just under one trillion dollars of American debt, in the form of bonds and mortgages among others, now it owns nearly four trillion.
The next Chairman of the Fed, and the first woman to hold the job, is Janet Yellen.
She will have to face the tricky task of tapering, cutting off the money tap that is QE.
Just the suggestion of tapering is enough to spook the markets, however Janet Yellen has said it is inevitable: “I would agree that this programme cannot continue for ever. There are costs and risks associated with the programme.”