Before we get started…, what exactly is The Federal Reserve or “The Fed?”“In a nutshell, The Federal Reserve, or “The Fed,” is the central banking system of the United States. Its job is to help keep our financial systems safe and our economy stable,” according to Erica Gellerman of Credit Karma.
You’ve probably heard of the Federal Reserve…, but how does it affect our daily lives?
As the central bank of the United States, “the Fed” sets policy that can affect things like mortgage interest rates, stock prices and even our personal finances.
The Fed consists of three key entities:
One, the Federal Reserve Board of Governors. These seven board members oversee the Federal Reserve System. These “Governors” are appointed by the President of the United States and confirmed by the Senate for 14 year terms.
Two, a network of 12 Federal Reserve banks around the country that do a lot of administrative work.
Three, the Federal Open Market Committee, or FOMC. This committee, whose job is to set monetary policy, is made up of the seven Board of Governors members and five Reserve Bank presidents.
Regarding “the Fed,” we hear the term “setting monetary policy” a lot. I believe this basically means they decide what they need to do in order to get the outcomes they desire both politically and monetarily, which may or may not be in the best interests of the American people.
The Fed promotes “a healthy” U.S. economy through its monetary policy. The FOMC holds eight meetings per year to review economic trends and vote on new monetary policy measures.
Officially, the Fed is supposed to strive for high employment and low inflation.
The Fed also supervises and regulates many banks and other financial institutions to promote stability in the financial markets.
Lastly, the Fed Acts as the government’s banker, while maintaining the Treasury Department’s checking account and processing other transactions like Social Security payments and government payroll checks.
Erica Gellerman of Credit Karma adds, “Before the creation of the Federal Reserve, the U.S. was plagued by financial panics and bank failures. Banks usually didn’t keep a lot of cash on hand. If customers lost confidence in their bank — usually after hearing about a failure of another bank — they would rush to their bank to withdraw money. If the banks didn’t have enough cash around, they would end up going out of business. This panic could trigger multiple bank failures, which is what happened during a particularly severe panic in 1907.”
They of course could not have all of these rich bank owners and investors losing money and being dependent on their everyday customers.
“After this panic, President Woodrow Wilson signed the Federal Reserve Act, and Congress established the Federal Reserve System in 1913. The goal of creating the Federal Reserve was to end the instability of the banking system.”
Continue Reading Here: Many people are fed up with “The Fed.” – Mr. Erickson Rules!