Federal Reserve Essay Papers

The Federal Reserve System On December 23, 1913, the United States of America created the Federal Reserve System. The Federal Reserve System is the central banking system of the U.S. The Federal Reserve’s headquarters is located in Washington D.C. Interesting fact, the United States had excellent economic growth when there was actually no Federal Reserve or central banking system (ETF Daily News). The Federal Reserve System will be evaluated by its history, what it does, and problems it has faced. The first main point to evaluate the Federal Reserve System is its history. The Federal Reserve was made in 1913 and was the United States central banking system, but did you know that the first attempt of a central bank was made in 1791?

The main purpose to why the Federal Reserve System was made is because of banking panics. Before the Federal Reserve was established, the United States already went through several banking and financial catastrophe. The financial crisis from 1907 was the one that made Congress to come up with the Federal Reserve System because they wanted to have a more stable, safe, and flexible monetary system. According to Wikipedia, they try to state the problems of financial and banking panics, fulfill as the central bank, protect credit rights, manage the country’s money supply by achieving goals of maximum employment, keep costs stable and steady, stop inflation and deflation from occurring, and much more. The Fed’s main desirable goals are low unemployment, economic growth, price stability or low inflation, and financial market stability. The Federal Reserve’s profession is to also encourage a “sound banking system” and a well economy. To reach this goal, the Federal Reserve has to fulfill as “the banker’s bank, government’s bank, and the nation’s money manager” (Investopedia). The Fed also sells and saves the government’s securities, which supplies the country’s paper currency. “Then the United States Treasury makes the country’s cash supply and sells the paper currency to the banks of the Federal Reserve at a production cost and the coins at face value” (Wikipedia Foundation). The Federal Reserve

The Federal Reserve System has had its ups and downs. It was about one year until World War I broke out. The Fed seemed to be doing alright as it had a great impact on the U.S. because the Fed was able to discount bankers’ acceptances. Because of this, we were able to help the flow of traded goods to Europe that was not directly aiding to finance the war until 1917. When the United States declared war on Germany, the most important thing for us to do was finance our own war. The severe problems and disasters the Federal Reserve faced was during the Great Depression and the Market Crash. During the 1930’s, the Fed struggled and failed to maintain financial stability. In this time period, almost ten thousand banks failed and most Americans blamed this on the Federal Reserve. Around the 1950’s, the Federal Reserve was devoted to keeping a low interest rate on government bonds after we entered World War II. They did this so the government has the ability to have a less expensive debt funding after the war. In the early 60’s, low inflation was maintained, but in the late 60’s, inflation just kept going upward. Although from 1984-2006, the Fed had some success despite the stock market crash of ’87 and terrorists attacks from 2001. In 2007, a crisis broke out due to big disruptions in the wholesale bank-lending market. Around 2008, the Fed made two programs that