The Federal Reserve has been in almost everyone's vocabulary in the past few months due to struggles in the financial and housing markets that have resulted in a major need for assistance. To clarify what the Federal Reserve is and how it contributes to our country read the following explanation.
About the Federal Reserve
The Federal Reserve is an independent government affiliated entity that was founded in 1913 after President Wilson was approached with the idea to establish a private central bank that would control the country's funds. The bank would print reserve notes and lend them (with interest) to the government to redistribute as legal tender, or money, which we use today.
What Does it Do?
Since its creation, the Federal Reserve's primary function has been to serve as a central bank for the United States and maintain control over the country's money supply. In general, it has a few key functions that all revolve around managing money.
They are:
- Adjusting base interest rates.
- Printing and releasing new bank notes.
- Removing current notes from circulation.
- Protecting credit rights of consumers.
- Supervising and regulating banking institutions.
- Maintaining a stable financial system.
As a result of these actions, this organization is able to control the value of the U.S. dollar and, in turn, influence our economy, as well as our position in the world economy.
As the government tries to revive our struggling economy in the midst of a recession - the Federal Reserve has been in the news numerous times due to the contributions made to various markets, such as the financial and housing markets. When tons of money was lost in the stock market, and record high foreclosures shutting down the lending industry, the "Feds" have stepped in to distribute money to keep many banks and businesses afloat.
The Federal Reserve system has control over so many facets of the economy. By learning more about the Federal Reserve, you can feel empowered with your understanding of what happens to your hard-earned money. To learn more about the Federal Reserve and how it works, make sure to visit federalreserve.gov.
