The Federal Reserve: Its Role In US

Introduction

Money, its function, Federal Reserve, its role in U.S. economy such as money supply, Bitcoins, and its role in U.S. economy is the backbone of the U.S. economy in the current market. As soon as you heard the word economy you know it is all about money, market, demand, supply, price, government policies, government role, business (local/international), and many other economic factors.

Function of money

Money is useful in any economy because it has many universal functions such as medium of exchange, unit of value, the standard for deferred payments, and store of value.

A medium of exchange: Money acts a medium of exchange in our society, which is the key function of it. I know before money was ever introduced in the market, people

The Federal Reserve is the only government organization that can conduct the monetary policy. Monetary policy is how central banks manage liquidity where liquidity is how much there is in money supply to create economic growth (K. Amadeo, 2017). This includes all cash, credit, checks and other mutual funds in the money market. The primary propose of this policy is to manage inflation and reduce the unemployment.

Similarly, the Federal Reserve helps to have the stability of the financial system because it works so closely with the treasury which is one of the branches of federal government to manages the national finances after Congress sets the fiscal policy (K. Amadeo, 2016). The Federal Reserve has created many new tools to improve the financial stability after the financial crisis of 2008 such as Term Auction Facility, the Money Market Investor Lending Facility and Quantitative Easing (K. Amadeo, 2017). This is the key to the stability of the financial system.

Bitcoin as a form of currency serves as money in the market. Just like the money it works as a medium of exchange since you can buy things with them. In the current market, it is not that popular and not everyone accepts it. But there is a chance that we may find someone trying to sell something with it.

Again just like money, it gives a store of value, we can purchase some and keep them because it has the same feature as the dollar that can be used in the same value in future. It’s worth will not go down after sometimes like the price of others goods can go.

Bitcoin also serves as a unit of account just like the dollar. How we set the price of our goods or services in dollar amount can be done in Bitcoin because it works as money/dollar. That means to say that all the Bitcoin we have, worth the same as each other.

Drawbacks and risks of Bitcoins

We just learn how Bitcoin works the same as U.S. dollar or other money such as a currency in transactions, storing value, and accounting. I believe that there can be several drawbacks to it. I think there can be a legal issue and some others so it can be frailer