Should One Fed Hold All That Power?


The Fed, also known as the Federal Reserve, is the national bank. It was created when President Wilson signed the Federal Reserve Act. The Fed has four main jobs. The Fed must organize the nation's monetary policy, supervise and regulate banks and any other money/credit related organization, providing financial services to the US Government, and operates/oversees the nation's monetary system.

The Fed can affect business practices by raising or lowering the money supply. When the Fed raises the money supply, it at first lowers interest rates and causes more people to invest. When this happens, more people have more money in their hand that they can and will most likely spend, causing businesses to ramp up production and order more materials to do so. This lowers unemployment rates and increases the demand for capital goods. Eventually, inflation occurs to compensate all of the new money in the system, and the Fed is in charge of making sure inflation due to the money supply stays balanced. Too much money added to the money supply can lead to drastic inflation, and too little can lead to a decreased economy.

In the end, the Fed can control a lot of things in the government and economy. The Fed practically has the fate of the economy, including you and your financial future, hanging in the balance. So, it is up to you to answer the question. Should one Fed hold all that power?


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