The Purpose of the Federal Reserve System Essay -- The Fed and the Eco

Over the past few years we have agnise the impact that the federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and vex pass judgment on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such a control over our Economy, we decided to tackle the subject of the Federal Reserve governing body and try to get a better understanding of the history, the structure, and the monetary policy of the power that it holds. The Federal Reserve System is the central banking authority of the United States. It acts as a fiscal agent for the United States government and is custodian of the reserve accounts of commercial banks, makes loans to commercial banks, and is authorized to issue Fede ral Reserve notes that constitute the ideal supply of paper currency of the country. Created by the Federal Reserve Act of 1913, it is comprised of 12 Federal Reserve banks, the Federal Open Market Committee, and the Federal consultative Council, and since 1976, a Consumer Advisory Council which includes several thousand member banks. The board of Governors of the Federal Reserve System determines the reserve requirements of the member banks within statutory limits, reviews and determines the discount rates established pursuant to the Federal Reserve Act to serve the public interest it is governed by a board of nine directors, six of whom are elect by the member banks and three of whom are appointed by the Board of Governors of the Federal Reserve System. The Federal Reserve banks are located in Boston, pertly York, Philadelphia, Chicago, San Francisco, Cleveland, Richmond, Atlanta, Saint Louis, Minneapolis, Kansas City and Dallas. The Federal Open Market Committee, consisting o f the seven members of the Board of Governors and five members elected by the Federal Reserve banks, is responsible for the determination of Federal Reserve Bank policy in the purchase and sale of securities on the open market. The Federal Advisory Council, whose role is purely advisory, consists of 12 members if they meet social rank qualifications. The Federal Reserve System exercises its regulatory powers in seve... ...erve. We feel that the latter is on the radical side of thinking, and that overall the Federal Reserve has the best interest of the nation and international economy in all their decisions regarding the increases in interest rates, etc. Since the onset of the Federal Reserve we have not gone into a major depression, and over a course of time there give be times when our economy will peak and boom and the Fed will feel that it is time to slow the economy by raising the rates. BibliographyFED 101 Hosted by The Federal Reserve Bank of Kansas City. http//www.kc.frb.o rg/fed101Friedman, Milton and Jacobson Schwartz, Anna. A Monetary history of the United States, 1867-1960. Princeton, 1963Hailstones, Thomas and Rothwell, John. Managerial Economics, 1993. Prentice Hall, 1993Metzler, Allan H. A History of the Federal Reserve, Vol I and II. University Press Books, 2002National Information Center for the Federal Reserve System. http//www.ffiec.gov/nicRabboh, wharfage and Bartson, Ronald J. Principles of Economics. Pearson, 2002The Federal Reserve Board. http//www.federalreserve.govThe Federal Reserve System Online. http//www.federalreserveonline.org