How the Federal Reserve System Functions - Term Paper Example

Comments (0) Cite this document
Summary
The question of how the Federal Reserve System functions is one intimately related to structure: how the entire system fits into the wider context of the Federal government. Unfortunately, the history of the Federal Reserve may be better summarized not as a functional history,…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.3% of users find it useful
How the Federal Reserve System Functions
Read TextPreview

Extract of sample
"How the Federal Reserve System Functions"

Download file to see previous pages the Fed”) is so deeply interconnected with the entire political system, the inevitably byproducts of central banks are business cycles caused by politically-oriented monetary policies. Politicians use the Fed as a means of imposing fiscal policies that, although look good to constituents, ultimately worsen and damage the economy further (Bresiger, 2001). The following is an account of how the Fed is supposed to work, and the effects that the central banking system is supposed to have. An account of how it actually works is an entirely different matter. The Federal Reserve is, in fact, a tool under public control, overseen and manipulated by government to accomplish the goal of a healthy, vibrant economy.
As said before, the question of function is deeply rooted in the question of structure, which is in turn related causally to the history of the Fed. The Fed began with “panics” in the early 20th century, wherein people raced to banks to withdraw deposits. A fragile banking system at that time was overwhelmed, forcing Congress to draft the Federal Reserve Act, which, has been modified through time to encompass broader and wider responsibilities. The Fed was forced to find the virtuous mean between the moral responsibility of the government and the private interests of banks, which gave rise to countless checks and balances imposed on the system by government influences (Meltzer, 2004). Congress, of course, ever since the first establishment of the Fed, has regulated the system. Based on that, the Fed is answerable to Congress and must work within the Congressional system. However, the Fed still retains a certain level of self-rule in order to carry out its responsibilities apart from the political process (Lapidos, 2008).
The Fed is composed primarily of three parts: the Board of Governors, the regional Reserve banks, and the Federal Open Market Committee. The first, the Board of Governors, is the agency of the Federal government regulating banks, ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“How the Federal Reserve System Functions Term Paper”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1552337-how-the-federal-reserve-system-functions
(How the Federal Reserve System Functions Term Paper)
https://studentshare.org/miscellaneous/1552337-how-the-federal-reserve-system-functions.
“How the Federal Reserve System Functions Term Paper”, n.d. https://studentshare.org/miscellaneous/1552337-how-the-federal-reserve-system-functions.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
The Federal Reserve System
...?Introduction The current economic situation is considered as one of the worst economic period in the history of United s of America. Starting in the end of 2007, economic downturn has resulted into the decline in GDP level, an increase in the unemployment as well as reduction in the consumer credit due to low consumer confidence and spending. The persistent decline in the economic activity therefore attracted the attention of the Government as well as the Federal Reserve System. Government took both the fiscal as well as monetary measures in order to stimulate the economy. These events however, led Federal Reserve System or FED to intervene into the economy in order to take some measures to correct the economic situation. FED... into the...
3 Pages(750 words)Term Paper
The Federal Reserve System
...discussing The Federal Reserve System, it is important to present a discussion on the role of central bank within the economy and how it supports it. There are three important tasks or functions of a central bank within an economy i.e. to issue currency notes, regulate monetary policy as well as control the inflation. Based on these broader objectives, a central bank therefore also serves as the banker of the government and serves as lender of lost resort for the banking system in the country. Its role is therefore not just limited to the management of monetary policy within the economy but also to ensure that the whole financial...
8 Pages(2000 words)Term Paper
The federal reserve system
...The Federal Reserve System The Federal Reserve, or the central bank, is among the most powerful economic institution in the United States of America. The Federal Reserve was given the power over regulation of the value of money by congress. In simple terms, the Federal Reserve came into being by enactment of the Congress. Consequently, the Congress has the obligation of overseeing the monetary policy and the Federal Reserve. This paper analyzes the importance of the Federal Reserve and strategy in stabilizing the economy...
3 Pages(750 words)Essay
Federal Reserve system
...? Macro 11 College: Question one The Federal Reserve System (FED) is responsible for the implementation of the monetary policy by managing the balances that financial institutions have in Federal Reserve banks. Besides this control of money, FED supplies currency and supervises the banking system. The money supply which consists of the circulating currency and bank deposits needs to be controlled in order to balance the lending and borrowing capacity of the financial institutions. FED uses three tools to control the money supply: changing the reserve requirements, open market operations, and changing the discount rate (Tucker, 2010, pg.408). Changing the reserve requirements. The banking system is required to keep a certain amount... the...
5 Pages(1250 words)Essay
Federal Reserve
.... The Board of Governors is appointed by the President who controls the functions of the Federal Reserve System. There are Federal Reserve Banks which operates in major cities of US. The major objectives of the Federal Reserve System are aimed at the welfare of the US economy. The Federal Reserve System in US is responsible for maximizing the employment opportunities in US, stabilizing the prices in US economy and achieving stability in long term interest rates (Wells 58). The monetary policy is designed by the Federal...
5 Pages(1250 words)Essay
Federal Reserve
...by issuing liquid assets, such as treasury bills. Tool 2. Proposed change by Fed when economy growing too quickly (10 points) 3. Proposed change by Fed in economic recession (10 points) Interest Rates Increase the Interest Rates Decrease the interest rates Open Market Op Sell Securities Buy Securities Funding Issue Illiquid Assets Issue Liquid Assets 4A) During the last year (2008), we witnessed a severe recession. In order to lubricate the economy towards growth many governments decided to reduce the interest rates in order to increase the aggregate demand and lead the economy towards growth. The graph in this site shows, how rapidly interest rates were decreased in Australia following this recession....
3 Pages(750 words)Essay
The Federal Reserve System
...The Federal Reserve System To provide the United s with a stable monetary and financial system, Congress established the Federal Reserve Bank System (Fed). The Federal Reserve Act of 1913 signed by Woodrow Wilson designated the Fed, the central bank, with the responsibility for establishing monetary policy. Monetary policy is the actions taken by the central bank to influence the availability and cost of money and credit to assist in promoting national economic goals. The Fed's monetary policy decisions affect the flow of money and credit in the economy. The Federal...
3 Pages(750 words)Essay
U.S. Federal Reserve System
...US Federal Reserve System “The central banking system of United s was created in 1913 byUnited States congress in order to provide safer modes of monitoring and a flexible banking system” (Philadelphia, pp. 2). The Federal Reserve System is a government institution developed to monitor country’s economic policies including employment, supply of money and interest rate. Federal Reserve System operates like an independent entity to control public and private aspects and comprised of seven members elected by the senate and president on 14 years agreement...
2 Pages(500 words)Research Paper
Federal Reserve
...Federal Reserve Number: Introduction USA’s economy was faced by numerous issues/challenges during the spring (fromMarch up to May). Some of these challenges were inherited from the previous years particularly the famous 2008/2009 US economic crisis and federal reserves. However, by the beginning of 2012, the US economy was stable according to a report that was released by the Federal Reserve Bank of San Francisco on January 2012. The report was suggesting that the national economic activities were expanding at a modest rate with the economy characterized by high consumer spending habits, expansion of the manufacturing industry and growth...
2 Pages(500 words)Article
Federal reserve
...also affected global trade as it reduced the exports. High prices of oil in 2008 also led to cost-push inflation. This is because although there was a recession in Europe and the US. Oil was still in high demand and China and India. Consequently, oil prices did not lower (Pettinger 2013). Federal Reserve Policies Designed To Fix the Economy and Explain Why [And How] They Were Effective According to Thorton, the financial crisis began Rising in august 9, 2007 when BNP Paribas, France Largest bank stopped redeeming three investments funds. The Federal Reserve (Fed) reacted to this by announcing a discount window by reducing the interest rate by 50 basis...
6 Pages(1500 words)Admission/Application Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Term Paper on topic How the Federal Reserve System Functions for FREE!
Contact Us