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Federal Reserve Essay

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The Federal Reserve is the central bank of the United States of America and its main responsibilities include: regulating the country's financial institutions and implementing monetary policy. However, the Fed we know today is not what it was hundreds of years ago. The development of this central bank has not only been a long evolving process, but has been shaped by many political decisions and historical events.

The central bank can be traced all the way back to the Colonial period. where Alexander Hamilton and Thomas Jefferson were at odds about this topic. On one hand, Alexander Hamilton was a strong supporter in the development of a central bank and the need for stable currency. Thomas Jefferson was on the opposite side of the spectrum, …show more content…

The bank was created with a goal of providing some form of stability to America's currency. Even with the bank being widely successful, the Jeffersonian Democrats' opposition in 1811 led to the First Bank of the US to not have a charter …show more content…

However, the Great Recession was one of the toughest challenges the Fed had seen up to this point.The Great Recession was a global economic downturn that lasted roughly from 2007 to 2009. It was caused by a combination of factors such as: deregulation of the financial industry, the stock market plummeting which erased a wide margin of wealth, the utter collapse of the housing market. It was the Fed's job to find a way to fix the economy. The Federal Reserve responded by lowering interest rates to near zero levels, quantitative easing which involves purchasing large amounts of bonds and other securities to attempt to inject liquidity into the market, and established a wide number of lending facilities to provide credit to financial institutions that were struggling during the crisis. Overall, these actions that were taken by the Fed helped to prevent a complete collapse of the economy and allowed it to recover in the following

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Alexander Hamilton, a late 18th-century politician, was a major supporter of the National Bank. The National Bank is a bank that facilitates daily transactions and collects tax revenue for the federal government. In the 1790s, there were two distinct sides to this debate: the Hamiltonians and the Jeffersonians. The Hamiltonians, in alignment with Hamilton’s beliefs, believed in a looser interpretation of the Constitution, while the Jeffersonians believed the opposite, in alignment with Thomas Jefferson’s beliefs. Ultimately, this debate ended in 1819 when the Supreme Court ruled the National Bank constitutional in the McCulloch v Maryland case.

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