The Fed and its Wonderful Powers
By: Sarah Reeves
What is the Fed?
The Board of Governors
The Federal Open Market Committee
The Fed and Monetary Policy
Federal Reserve Banks
Manipulating the Money Supply
How the Fed uses it's powers to encourage and discourage business practices
1. reduce the fund rate through market operation.
2. reduce the discount rate for the banks.
3. reduce the required reserve ratio for the banks.
All of them will create more liquidity so that the banks can lend more money to business. On the contrary, if the Fed wants to discourage businesses, it just do the reverse.