What does the Federal Reserve do?

  1. Ari Lamstein profile image80
    Ari Lamsteinposted 5 years ago

    What does the Federal Reserve do?

    Why was the Fed created, and why do some people hate it so much?


  2. profile image0
    rickyliceaposted 5 years ago

    http://www.bloomberg.com/news/2012-02-1 … choes.html

    It was created by a secret group.

    Aldrich invited men he knew and trusted, or at least men of influence who he felt could work together. They included Abram Piatt Andrew, assistant secretary of the Treasury; Henry P. Davison, a business partner of Morgan's; Charles D. Norton, president of the First National Bank of New York; Benjamin Strong, another Morgan friend and the head of Bankers Trust; Frank A. Vanderlip, president of the National City Bank; and Paul M. Warburg, a partner in Kuhn, Loeb & Co. and a German citizen.

    Its basic functions are to loan and create money for the Government and the Banks.
    People hate it because it was created in secret, loans money at below market rates to banks, creates money to finance the government which equates to a hidden tax.

  3. LandmarkWealth profile image81
    LandmarkWealthposted 5 years ago

    The Federal Reserve has numerous functions.  It was created as a result of the fact that banking panics had become to common place.  The two primary functions of the Fed are monetary policy and banking regulation.  It's monetary mandates are designed to control the pace of inflation and attempt to use monetary policy as a means to impact employment.  To do this the Fed sets short term interest rates through the discount rate and the Fed Funds rate.  Additionally it can use open market operations (the buying and selling of Gov't bonds).

    There are many fair criteque's of the Fed that I agree with.  they have clearly expanded their power base beyond areas that I personally am comfortable with.  However despite popular opinion, their actions and creation are not based in conspiracy.  Rather most of their reckless actions are a result of poor fiscal policy and passing the buck to the monetary arm of economic policy.