Money and the federal reserve system - Term Paper Example

The Federal Reserve had always played an immense role in controlling the financially crucial situations ever originated in the USA. Its instruments come in the form of feasible monetary policies that take care not only of any present crisis but also those of the future. A good example is its mode of activities in the face of the recent global meltdown that not only helped in controlling the crisis but included measures to effectively control any aftermath. The present paper deals with the institution’s monetary policies which from time to time had acted like a shield against an economic crisis, for the country.

2 One of the commonest names which often come up as one of the strongest financial regulatory bodies in the world is that of the Federal Reserve. The Federal Reserve, often abbreviated as the Fed, being the apex financial institution of USA is responsible for designing the monetary policies of the economy and hence for controlling the flow of money in the nation. Since the amount of money supply is a decisive factor behind the credit availability and hence that of any inflationary developments in an economy, the importance of the institution cannot be slighted.

Inflation can often have larger outcomes, ranging from severe unemployment to that of a financial crisis. Thus, there must be an institution in every nation entrusted with taking care of the vice; the Federal Reserve does the job in USA (Schenk, n.d.). The Fed has been conferred the responsible of planning the monetary policies for USA since . Its basic objective had been to work-out a feasible solution given the prevailing economic condition of the economy so as to provide a brighter and better future to the countrymen.

However, the string of the ultimate power of the bank is largely bestowed in the hands of the Congress. Recently though, on October 2008, the grips have been loosened a bit and the bank has been given the right to endow