Federal Reserve System Case Study

When identifying the effectiveness of a process the history must be identified first. Reviewing the history allows for a better process because best practices can be identified and repeated. In this case, we can identify the Fed’s responsibility. According to FederalReserveEducation.org money associated with banks was first highlight to help fiancé wars and battles (https://www.federalreserveeducation.org/about-the-fed/history). Why is the Federal Reserve Bank so important to the economy and the people living in it? The responsibility of keeping our economy stable falls on the effectiveness and efficiency in which the Federal Reserve Board is ran. The Federal Reserve System's structure is composed of the presidentially appointed Board of

Inflation is the devaluation of the dollar over time due to change in financial markets. The Federal Reserve is responsible for regulating money which affects the interest rates to avoid inflation through monetary policy. First, The Fed (the lender) can affect other financial institutions (the borrowers) by increasing interest rates which encourages less spending, more savings which are in the best interest of the consumer since borrowing money can become more expensive. Second, The Fed can also sell bonds on the open market to remove money from the economy to reduce inflation to help stabilize the economy which is an objective of the Fed. Productive policies should focus on stimulating the growth of the economy thus improving the Gross Domestic Product (GDP) consistent with their goals in stabilizing inflation rates and real economic growth (Jordan, 2016). Finally, the Federal Reserve can require higher reserve requirements for banks which will restrict the amounts of capital the banks can lend to their customers ("How Does Monetary Policy Influence Inflation?”

The average person may not stop to think about monetary policy and how the changes made by the Federal Reserve through monetary policy will affect them. To the general public, the rise in interest rates may be considered as an attempt for a bank to make more money or for the government to pay off debts. The Fed has protocols and procedures in place to make sure transparency is available the consumer so educated decisions can be made. The Fed’s mission is to ensure we have a steady and affluent economy, and there are numerous variables that can influence our economy. It is their objective to make sure that each controllable is observed to guarantee that we are doing everything legally possible to improve our economy yearly. The quantity of money available along with the prices for goods and services in the economy needs to be monitored and controlled. In the United States, the Federal Reserve is responsible for carrying out monetary policy. Monetary policy seeks to stabilize inflation, maintain employment and achieve long-term growth with our GDP. If the Federal Reserve was not established then consequences such as higher unemployment rates, lowered consumer confidence, and minimal investment