The Federal Reserve
The Federal Reserve is what is in control of our state ‘s money supply. It provides the devising of paper money and coins, which are what most people, know about it, but I am traveling to explicate the Fed ‘s other services that it provides to the American people.
History of the Fed
On December 23, 1913 The Federal Reserve Act was passed threw Congress and Woodrow Wilson. It was established to maintain the economic province of the state in better conditions. It began as a system to maintain the economic sciences elastic, secure, and more stable. Over clip the responsibilities changed because of some of the different things that happened in our state, for illustration The Great Depression. The Federal Reserve Bank is located in Washington Dc.
The Federal Reserve Act
The Federal Reserve Act is what created the Federal Reserve. It was an act declaring that the state has a private and public bank. This bank was to include eight to twelve private subdivisions of the bank. These Bankss were to include their ain subdivisions will individually appointed proprietors.
The Duties of The Federal Reserve
When the Federal Reserve foremost started off it did n’t hold every bit many duties as it does today. It has become more and more reliable, until it got to the point of being the figure one banking system of the United States. Some of the responsibilities that it has today include:
- Serving as the cardinal bank of America
- Balancing the authorities disbursement along with private disbursement
- Protecting recognition rights of citizens
- Pull offing the state ‘s money supply threw Monetary Policy which includes the ends of full employment and supervising long-run involvement rates
- Preventing rising prices and deflation
- Strengthen the economic system of the United States
- Coin and print paper currency
All of these things are really of import to keep so that the United States wo n’t hold to travel threw another Great Depression or Stock Market Crash.
Some people get confused about who physically prints and coins money. It is true that the Federal Reserve determines how much money, what it will look like, and the sum of certain measures need to be replaced ; they do non physically publish the money themselves. This is done at U.S. Treasury ‘s Bureau of Engraving and Printing.
Members of The Fed
There are seven members of the Federal Reserve who are dominated by the President, and so confirmed by the Senate. A full term for these seven members is 14 old ages, and the footings start in February of even-numbered old ages. In order for the President and Vice President of the Fed to acquire this topographic point, they have to hold already been on the Board. The 2nd thing that happens is they get dominated by the President. Once the President decides who he, or she, wants to name it gets sent to the Senate for the concluding determination. The President and Vive President of the Fed service for four old ages, but this is non taken out of the 14 old ages they are allowed to function on the board. Once the members have served for 14 old ages, they can non function once more. If a member leaves the office before completing their full term, they may subsequently come back and complete up their term.
The Federal Reserve Board of Governors meets several times during a hebdomad. Some of these meeting are unfastened to the populace, who might be interested in what the Fed is making particularly in a clip like now. Other meeting that might include confidential and more serious affairs are traveling to be near.
The current President of the Fed is Ben S. Bernake, who started his 2nd term in February 2010. The Vice President of the Fed is Donald L. Kohn, who took office in August 2002.
The 12 Federal Reserve Districts
The United States is divided into 12 different territories. In each of these territories there is a Reserve Bank to function it. The territories are named after the metropoliss in which the Reserve Bank is located.
The 12 territories are Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The different territories cover a batch of country environing them. Boston covers most of New England, San Francisco screens from California to Arizona, Utah, and Idaho.
On each dollar measure, there is a missive and a figure located on it. This missive or figure indicated which Federal Reserve Bank it was made in. The list below shows all of the letters and Numberss for each of the 12 modesty Bankss:
A: Boston, B: New York, C: Philadelphia, D: Cleveland, E: Capital of virginia, F: Atlanta, G: Chicago, H: St. Louis, I: Minneapolis, J: Kansas City, K: Dallas, and L: San Francisco.
Each of the 12 Reserve Banks are run by a commission of 9 people. Three of these members are elected by the Board of Governors, and the staying six are nominated by other Reserve Banks.
The Owners of The Federal Reserve Bank
The Federal Reserve is frequently known as the “Banker ‘s Bank” because it is publically owned by federal Bankss across the state. In order for a bank to be a portion of the Federal Reserve it has to purchase stock in the Fed. Merely federally owned Bankss can purchase the stock. Common people who invest in the stock market can non but stocks for the Federal Reserve.
The Federal Reserve ‘s Monetary Policy
The Monetary Policy of The Federal Reserve can pull strings the involvement rates that are in consequence in the United States. The Monetary Policy is made by the Federal Open Market Committee ( FOMC ) . The members of FOMC are the Board of Governors and 5 presidents of the territory modesty bank. In order for FOMC to maintain the involvement and employment rates it has to make a few things.
When money needs to be saved they will utilize a “tight money” policy. In this policy they will Increase price reduction rates, Sell authorities securities, make proclamations of tight money, and increase the Reserve Requirements. The Reserve demands are merely the sum needed to purchase stock and go an proprietor of the Federal Reserve. When money is in to much supply and a hazard of rising prices is about to happen they use what is called and “easy money” policy. This is merely the antonym of the “tight money” policy. This involves the lessening of price reduction rates, purchasing of authorities securities, doing proclamations of easy money, and a lessening in the Reserve Requirements.
By making this the Federal Reserve can halt rising prices and deflation before it happens. It is easier to pull off higher involvement rates that it is to pull off rising prices.
How the Fed affects the Economy
The Federal Reserve affects the economic system based on how it manages to maintain rising prices down. This could be done good, or severely. If rising prices does travel up, The Federal Reserve will make everything in its power to acquire it back down. But before The Federal Reserve gets rising prices at a good degree people are more likely to see some alterations. These alterations include the addition on unemployment rate, the value of money decreasing, and the monetary values of populating going intolerable more and more mundane.
The Federal Reserve has been taken into consideration to be unconstitutional. Since before the Federal Reserve Act was even passed there has been argument over if the Fed was created to protect large Bankss and leave little 1s to “fend for them selves” . Some people who are apart of Congress besides experiencing like the Federal Reserve ‘s high involvement rates are bad for the economic system. One economic expert by the name of Peter Temin feels that lower involvement rates will take down the unemployment rate.Other people feel like the Federal Reserve has done a great occupation by holding higher involvement rates, in order for rising prices to be kept at a sensible degree so that our economic system is non damaged.