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Reasoning Behind The Creation Of The Federal Reserve System

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December 24, 1913, the United States Congress along with the help of President Woodrow Wilson created the Federal Reserve Act. The Federal Reserve System was established as an independent government agency. The reasoning behind creation of the Federal Reserve, was to establish a disciplined banking system, which would help avoid economic collapses, commonly known as a crash. Another reason the Federal Reserve System was created, was to protect the government system from political pressuring, so they could maintain an appropriate supply of money going into the economy. Prior to the creation of the Federal Reserve System, there was a fear that the central banks would gain too much power, which served as another reasoning behind the creation of …show more content…

Personally I think, this is a good thing, because the Federal Reserve System is responsible for studying economic trends, which makes them the most qualified to make decisions on how improvements can be made. However, if the United States Congress asks any questions about their decisions and/or actions, the Federal Reserve is obligated to answer. Also, the Federal Reserve’s chairmen is said to be regularly testifying to the Senate and House of Representatives, on decisions affecting the nation. The Federal Reserve board members, such as the chairman are nominated by the President, then must be approved by the …show more content…

These networks are spread throughout the nation, with their own sub categories known as branches. The twelve Federal Reserve Banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Federal Reserve board is located in the nation’s capital, Washington D.C. The Federal Reserve System does now operate as just a central bank, but it is also responsible for studying economic trends. According to the economic state, the Federal Reserve is responsible for making policies to help the economy work well.
Since there have been innovations in technology, transportation, communication, and financial services, revisions have been made to the act. This makes policies more fitting, for the economy. The Federal Reserve System is also responsible for promoting growth. Along with that they are responsible for maintain high levels of employment, and the stability of prices. The stability of prices help maintain purchasing power of the United States dollar, and interest rates. In other words, the Federal Reserve is responsible for validating that the United States has an appropriate banking system, and a stable

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