The Fiscal Fed

93 Pages Posted: 22 Jul 2023 Last revised: 8 Jan 2024

See all articles by Will Bateman

Will Bateman

Australian National University (ANU)

Date Written: February 2, 2023


The US Federal Reserve System is conventionally understood as a private-market stabilising institution that has no settled role in supporting the fiscal power of the Treasury. Contra that view, this article argues that the US central bank has always had an extensive fiscal role: building, smoothing and rescuing US Treasury debt markets. Employing a long-duration institutional analysis which draws on the empirics of the Fed’s internal deliberations, financial transactions and legal framework, the Fed’s fiscal functions are explored with a particular focus on operations during the World Wars, the Great Depression, the Cold War, the Global Financial Crisis and the COVID-19 Pandemic. In each period, the Fed’s main fiscal instrument was large-scale debt purchase programs, buttressed by other direct and indirect credit transactions with the Treasury. A deeper understanding of the Fed’s fiscal functions has implications for the constitutional design of economic institutions and legal-theoretic accounts of the financial system.

Keywords: Federal Reserve, Treasury, monetary finance, quantitative easing, constitutional law

JEL Classification: E42, E58, E63, N11, N12, P48

Suggested Citation

Bateman, Will, The Fiscal Fed (February 2, 2023). Available at SSRN: or

Will Bateman (Contact Author)

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601

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