Federal Reserve renovation prompts misinformation
Social media posts are sharing a video of the Federal Reserve building in Washington as evidence that the US central bank has no money. But the 2023 clip shows a white construction fence installed for renovation work, and economists say the Fed has wide-ranging powers that make it virtually impossible to run out of cash.
"The Federal Reserve is Boarded Up. Probably preparing for when people realise the banks haven't got their money," says a July 8, 2024 X post with a video of a fence in front of the Fed headquarters.
Similar posts sharing the video have circulated on TikTok, Facebook and Instagram -- the latest in a series of conspiracy theories about the Fed.
A Federal Reserve spokesperson emailed AFP a link indicating the bank has been under renovation since at least November 2022 (archived here).
"The Federal Reserve will remain open throughout the construction project, and Federal Reserve operations are not affected," the website says.
The National Capital Planning Commission approved the final site and building plans in September 2021 (archived here).
A reverse image search traced the clip to a TikTok post from January 4, 2023 with text that says: "Federal Reserve building barricaded by white wall" (archived here).
AFP visited the building July 9, 2024 and saw signs identifying the construction site.
AFP previously photographed the construction project in 2023.
'Detached from reality'
The Federal Reserve, created in 1913, includes regional Fed banks and a Board of Governors that oversees US monetary policy and ensures liquidity in the banking system.
Viewed as the "lender of last resort" to commercial banks, it can effectively increase the money supply by purchasing government and private securities. Some economists suggest these operations, which can help support economic activity during a financial crisis to keep credit flowing in the baking system, are "printing money" or creating cash out of "thin air."
But David Wilcox, a senior fellow at the Peterson Institute for International Economics and director of US economic research at Bloomberg Economics (archived here), said claims that the central bank has run out of money are "just not correct."
"A modern central bank, especially one that oversees its own currency like the Federal Reserve does, literally can't run out of money," Wilcox said July 10, 2024.
He said the claim "is so far detached from reality," and that there is no imminent threat of the bank going bankrupt.
A 2022 Brookings Institution paper from William English and Donald Kohn, two former Fed officials, backs that up (archived here).
"The Fed can't default because it can always create reserves to pay its bills," they wrote. "Moreover, the banking sector must hold the reserves created by the Fed, so the Fed cannot suffer from a run on its funding."
AFP has debunked other claims about the Federal Reserve here.
