Chapter 17 Data Exploration Question #5: Prior to the financial crisis of 2007-2009, the Fed seldom reduced its holdings of Treasury securities. Plot for the 2007-2009 period the Feds Treasury holdings (FRED code: TREAST) and its total assets (FRED code: WALCL) on a weekly basis. Did the Feds practices change during the crisis? If so, how? (Hint: Examine Table 17.1 to help with your response.)

Table 17.1 Balance Sheet of the Federal Reserve: December 2009 and December 2007 (Billions of dollars, month-end) 2009 2007 $ 1,835 35 $ 901 158 Assets Securities Of which: Mortgage-backed Federal agency debt Foreign exchange reserves Loans Gold Other assets Total 76 11 91 2,239 $ 792 5 Liabilities Currency Governments' accounts Commercial bank deposits Other liabilities Total 883 149 1,073 81 2,187 857 Capital (Assets minus Liabilities) $ 52 $ 37 Notes (period mean): Nominal GDP M1 M2 $14,454 1,696 8,544 $14,338 1,376 7,501 "Securities includes all forms of repurchase agreements. "Foreign exchange reserves" does not include the U.S. Treasury Exchange Stabilization fund. SOURCE: Federal Reserve release H.4.1 and U.S. Treasury and Federal Reserve Foreign Exchange Operations, Quarterly Report, Table 1. Table 17.1 Balance Sheet of the Federal Reserve: December 2009 and December 2007 (Billions of dollars, month-end) 2009 2007 $ 1,835 35 $ 901 158 Assets Securities Of which: Mortgage-backed Federal agency debt Foreign exchange reserves Loans Gold Other assets Total 76 11 91 2,239 $ 792 5 Liabilities Currency Governments' accounts Commercial bank deposits Other liabilities Total 883 149 1,073 81 2,187 857 Capital (Assets minus Liabilities) $ 52 $ 37 Notes (period mean): Nominal GDP M1 M2 $14,454 1,696 8,544 $14,338 1,376 7,501 "Securities includes all forms of repurchase agreements. "Foreign exchange reserves" does not include the U.S. Treasury Exchange Stabilization fund. SOURCE: Federal Reserve release H.4.1 and U.S. Treasury and Federal Reserve Foreign Exchange Operations, Quarterly Report, Table 1