The Federal Reserve System ( Fed ) - 980 Words

The article by Justin Wolfers describes how the Federal Reserve System (Fed), also known as the central bank of the United States, can alter monetary policy to help the economy recover during downtimes and recessions. Although the Federal Reserve System is not technically a political institution, such as that of the Bank of Canada, after it was nationalized in 1938, with its overall responsibilities lying with a board of directors. In other words, the Fed does not stack the deck to assist either the Democrats or Republicans; their decisions can still be influenced by congress and presidential elections due to the fact that a lot of the principles in money and banking are political. For example, changes in fiscal policy can also help an economy recover, which is defined as policy that involves decisions about government spending and taxation. Additionally, if the Fed were to turn to unconventional measures leading up to an election, political outrage, especially from Congress, woul d be likely. Therefore, these policy-makers at the Federal Reserve System are often left inadequately prepared to respond to an economic downturn or recession. As Wolfers acknowledges in his article, if the economy of the United States enters into a recession, the Federal Reserve System cannot use their usual solution of decreasing interest rates to energize the economy. It is because they already have interest rates set nearly as low as they will go, thus not giving policy makers much room toShow MoreRelatedThe Federal Reserve : The Central Bank Of The United States1526 Words   |  7 Pages The Federal Reserve Introduction The Federal Reserve, also known as the Fed is the central bank of the United States. The system was created on December 1913 during the reign of President Woodrow Wilson. It was during this time that President Woodrow signed the Federal Reserve Act, incorporating it into the law. The Congress was behind the creation of the Federal Reserve with the ultimate goal of making it safer and more reliable to keep the money. The Congress was also compelled to establishingRead MoreMonetary Quiz1291 Words   |  6 Pagessecurities to influence reserves in the banking system? Twelve Federal Reserve banks The Executive Branch of government → The Federal Open Market Committee The Board of Governors of the Federal Reserve | 14-3. Which of the following represents the money multiplier? Required reserve ratio Ãâ€" total deposits Total reserves - required reserves (Total reserves - required reserves) Ãâ€" multiplier → 1 à · (required reserve ratio) | 14-4. Suppose the banks in the Federal Reserve System have $200 billion inRead MoreThe Tour Of Federal Reserve Houston Branch1510 Words   |  7 PagesThe fed tour The tour of Federal Reserve Houston branch was so interesting. 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Over the past one hundred years the Fe deral Reserve has proven to benefitRead MoreThe Federal Reserve System Essay1075 Words   |  5 PagesThe Federal Reserve System The Federal Reserve System was founded by Congress in 1913 to be the central bank of the United States. The Federal Reserve System was founded to be a safer, more flexible, and more stable monetary financial system. Over the years, the role of the Federal Reserve Board and its influence on banking and the economy has increased. Today, the Federal Reserve Systems duties fall into four general categories. Firstly, the FED conducts the nations monetary policy. The FEDRead MoreThe Federal Open Market Committee1313 Words   |  6 PagesAbstract The Federal Reserve System has three branches: the Board of Governors, The Federal Open Market Committee, and Reserve Banks. The Federal Reserve System (Fed) supplies and regulates America’s money to all the banks. The Board of Governors is the main authority of the three branches of the Fed, and it supervises other banks. The Federal Open Market Committee is the most prominent policymaker of the three branches and regulates the supply of money in the economy. Federal Reserve Banks serveRead MoreThe Federal Reserve System And The United States Central Bank1196 Words   |  5 PagesThe Federal Reserve System (hereafter referred as the Fed) is the United States’ central bank (Federal Reserve.gov 1). Formed by the United States Congress in 1913 and signed into law by President Woodrow Wilson, the intention behind its creation was to offer a safer, more stable, and more flexible financial and monetary system for the United States (Federal Reserve.gov 1). Similar to other industrialized states, the United States’ Fed acts as a central bank designed to meet particular requirements