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The Federal Reserve: Control Of Our Country's Money Supply

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The Federal Reserve

The Federal Reserve is what is in control of our country's money supply. It provides the making of paper money and coins, which are what most people, know about it, but I am going to explain the Fed's other services that it provides to the American people.

History of the Fed

On December 23, 1913 The Federal Reserve Act was passed threw Congress and Woodrow Wilson. It was established to keep the economic state of the country in better conditions. It began as a system to keep the economics elastic, secure, and more stable. Over time the duties changed because of some of the different things that happened in our country, for example The Great Depression. The Federal Reserve Bank is located in Washington Dc.

The Federal …show more content…

Louis, I: Minneapolis, J: Kansas City, K: Dallas, and L: San Francisco.

Each of the 12 Reserve Banks are run by a committee of 9 people. Three of these members are elected by the Board of Governors, and the remaining six are nominated by other Reserve Banks.

The Owners of The Federal Reserve Bank

The Federal Reserve is often known as the “Banker's Bank” because it is publicly owned by federal banks across the country. In order for a bank to be a part of the Federal Reserve it has to buy stock in the Fed. Only federally owned banks can buy the stock. Common people who invest in the stock market cannot but stocks for the Federal Reserve.

The Federal Reserve's Monetary …show more content…

The Monetary Policy is made by the Federal Open Market Committee (FOMC). The members of FOMC are the Board of Governors and 5 presidents of the district reserve bank. In order for FOMC to keep the interest and employment rates it has to do a few things.

When money needs to be saved they will use a “tight money” policy. In this policy they will Increase discount rates, Sell government securities, make announcements of tight money, and increase the Reserve Requirements. The Reserve requirements are just the amount needed to buy stock and become an owner of the Federal Reserve. When money is in to much supply and a risk of inflation is about to occur they use what is called and “easy money” policy. This is just the opposite of the “tight money” policy. This involves the decrease of discount rates, buying of government securities, making announcements of easy money, and a decrease in the Reserve Requirements.

By doing this the Federal Reserve can stop inflation and deflation before it happens. It is easier to manage higher interest rates that it is to manage inflation.

How the Fed affects the

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