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... One common method of countering the effects of recessionary and inflationary periods, is practiced by the Federal Reserve System (Fed) through monetary policy. ... People have been continually critical of the Fed’s existence since former president Woodrow Wilson signed the Federal Reserve Act in 1913. ...
The Federal Reserve System is a necessary tool of the economy because of its ability to increase the stability of private banks. ... With a process as slow and as flawed as this, people sought opportunities to take advantage of the system. ... Because of these bad banking practices, the federal government did not have faith enough to use the private banks to store its funds. ...
The Federal Reserve System was also a welcomed addition to the U. ... economy because of political reasons. ... “As a central bank, it can be considered an ancestor of the Federal Reserve System (Taylor, p. ... The “Bank War” between those two men led to Jackson taking the federal government’s funds from the Bank and transferring them to selected state banks. ... The act used private banks as centers for federal funds. ... There was no system in place that could bail out the central banks when they were in situations in which they would need to increase their money supply quickly. ... It came up with a bill that called for the National Reserve Association, an organization run by bankers and supervised by the government. ... Although the bill was defeated, it was later used as the blueprint for the Federal Reserve System. ... Parker Willis, developed the Federal Reserve Act. ... The Federal Open Market Committee (FOMC) conducts the Fed’s everyday day financial market activities. The FOMC is made up of the seven governors and five Reserve bank presidents. The twelve Reserve banks and thousands of private banks make up the rest of the Fed (Schiller, p. ... 18) The system contains a good mix of private as well as public interests. ...
The Federal Reserve System was also needed in order to reduce geographical inequalities that existed prior to its arrival. ... By making this appointment, Wilson was able to use Bryan’s influence over rural America to increase support for the Federal Reserve Act.
After the Federal Reserve Act was formed, Congress paid careful attention to which cities would be chosen to host the twelve Reserve banks. ... He said:
No bank should be more than one night’s train ride from its Federal Reserve Bank. In cases of a run on his bank, a banker could gather up his commercial paper with maturities of thirty, sixty and ninety days, catch the train and be at the Federal Reserve Bank by morning, discount his notes and wire his bank that there was plenty of money to pay depositors. To place the Reserve banks more than a night’s train ride from the member banks it served, would make it impossible to meet one of the very needs for which it was designed. ... Because of these locations, along with the more than five thousand private banks in the Federal Reserve System, “the interests of agriculture, commerce, and industry are all represented. ... 17)
Presently, the Federal Reserve System is losing its grip on the nation’s money supply.
Approximate Word count = 2588
Approximate Pages = 10.4
(250 words per page double spaced)
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