Economic Analysis
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Economic Analysis
Mikayla Buttenhoff
Liberty University
C08:Gov200
Professor Myles
11/6/2023
2
Economic Analysis
The Federal Reserve act, signed in 1913, was supposed to implement itself as a decentralized central bank that balanced the competing interests of private banks and populist sentiments (Federal Reserve Education Staff, 2023 ). Considered to be the most powerful economic institution in the U.S., its key roles were setting interest rates, managing the money supply, and regulating financial markets (McBride et al., 2023). In reality though, all this did for us was go from a market-oriented economy to an extremely planned economy. Consequences to the state becoming the dominant force in, well, everything, alluded towards a corrupt currency (Martin, 2006). So why was the Federal Reserve Act set into place? Let’s get into it. For most of the 19
th
century, there was no central bank to fall back on as a lender of last resort. With banking systems
still fragile, the nation would consistently be swept with financial crises and panic leading people
to run and withdraw their money out of fear. This led to a domino effect as people heard this and immediately withdrew from other banks even when there was no danger of them failing (Federal Reserve Bank Staff, 2023). In 1907, a crisis again set off through bad banking decisions which gave, again
, another domino effect of mistrust that ultimately led to a huge realization that banks
needed a source of emergency reserves to prevent the panics and runs from driving them out of business (Federal Reserve Bank Staff, 2023). In layman’s terms, this was a great way to save the economy, but ultimately can provide tons of corruption. The Federal Reserve, still part of the U.S Government, is still considered to be its own independent office. What does this mean though? This means that it is able to make decisions without the approval of congress or even the president (Zucchi,2023). Firstly, they conduct monetary policy. Monetary policy is a set of actions available to the central bank to
3
achieve sustainable economic growth by adjusting the money supply. This means that it can create State-manipulated currency. This fake, debauched currency is then no longer backed by any valuable commodity for which it can be exchanged (Martin, 2006). Glenn R. Martin states that this state-manipulated currency that can end to inflation, is really just the government taking control
over an unbacked currency to devalue the currency in order to repay its debts with less than it owes. Therefore, the government systematically “rips off” its debtors and we have institutionalized inflation (Martin, 2006). This is how the government has overstepped bible principles in economic policy, because it is considered institutionalized theft. Martin goes on by
saying that “The state institutes systematic theft as a way of life (or, to be more accurate, as a way of death) and the greatest thief becomes the government. Consequently, evil and corruption
become pervasive, for how can a state which institutionalizes crime and thrives on theft effectively oppose crime or pursue justice?” (Martin, 2006). He could not have said it better. The bible says “Do not steal, do not lie, do not deceive one another”, Leviticus 19:11 (NIV, 2011). And also, in 1 Timoty 6:10, “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs” (NIV, 2011).
To conclude, if limited government and consistent elections sustain corruption, why shouldn’t this be the same case for the Federal Reserve? We have given so much power to a form
of government that does not even answer to any other form of congress, so for that corruption is almost begging to exist.
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Related Questions
Topic: Federal Reserve and the Central Bank
Question : What is the difference between illiquid banks and insolvent banks? How does that difference affect the lender-of-last-resort role of central banks?
arrow_forward
1 ****************
1) Consider the US Federal Reserve System and compare it with another central bank in a major country, such as the Bank of England, the European Central Bank, the Bank of Japan, the Reserve Bank of India, etc.
a)What are two features, characteristics, or practices of the second central bank that you chose to compare with the FED that are very similar to the FED?
b)What are two features of that central bank that differ significantly from the FED? Explain.
P.S. CHOOSE BANK OF JAPAN
arrow_forward
GNBS Chapter 16
How do commercial banks obtain funds?
What is the role of the Federal Reserve bank?
What is a discount rate?
What are reserve requirements and how do they work?
What is contractionary and expansionary policy?
What are some of the policy tools used by the Federal Reserve bank?
What is insider trading?
What does an investment banking firm do?
arrow_forward
What were the two previous central banks the United States had before the current Federal Reserve system? When was the Federal Reserve established? How old are some other central banks in other countries? Describe in detail how the Federal Reserve is structured and explain how it is mostly independent from political interference? Using ideas like supply and demand, explain how the Federal Reserve uses open-market operations to either raise or lower interest rates at the direction of the Federal Open Market Committee (FOMC). See if you can find what the most recent decision made by the FOMC was concerning interest rates and explain how that will be reflected in its open-market operations.
arrow_forward
Question 1
What is the role of the central bank in the financial sector and economy as a whole
What is the structure of the central bank, highlight the key departments and their functions
If government has power to control printing, why can they just not print money to pay debts
arrow_forward
What is the role of the Federal Reserve in the United States? A) To provide legal advice to
financial institutions B) To conduct monetary policy C) To insure bank deposits D) To offer
consumer loans Don't use chatgpt or other ai tool. If you know correct answer then attempt
if you gave wrong answer I will give 10 dislikes and more from my friends account
arrow_forward
5-Please briefly discuss what is meant by bank liquidity and bank solvency? Why they are important for the health of banking system? Identify and briefly describe the three traditional instruments that may be used by the Federal Reserve to set monetary policy.
arrow_forward
1) https://openstax.org/books/principles-macroeconomics-2e/pages/15-1-the-federal-reserve-banking-system-and-central-banks
2) https://openstax.org/books/principles-macroeconomics-2e/pages/15-2-bank-regulation
3) https://openstax.org/books/principles-macroeconomics-2e/pages/15-3-how-a-central-bank-executes-monetary-policy
please I need a short summary for these articles.
arrow_forward
The Federal Reserve's organization
There are 5 , 7, 12 Federal Reserve regional banks.
Which of the following contributes to making the Federal Reserve an independent policymaking body?
A) There are 12 Federal Reserve banks.
B) Its role is written into the U.S. Constitution.
C) Members of the Board of Governors are appointed for 14-year terms.
The Federal Reserve's primary tool for changing the money supply is choice: the reserve requirement, open-market operation, the discount rate. In order to increase the number of dollars in the U.S. economy (the money supply), the Federal Reserve will choice: buy, sell government bonds.
arrow_forward
Social security in the U.S. is funded by
government expenditures
current and future taxes
the private sector
OU.S. private stock and private bond markets
Future U.S. deficits could be decreased by
increasing transfer payments and decreasing interest payments on the debt
O decreasing government expenditures and increasing taxes
increasing government expenditures and decreasing taxes
decreasing current an
future taxes
The government budget is in DEFICIT when
OT G-Transfers (TR) Interest on the Debt (INT) 0
Government expenditures (G) - Investment expenditures (I) 0
arrow_forward
QUESTION 16
Which of the following is one of the Federal Reserve System's two policy goals (also called its dual mandate)?
Economic growth
Maximum employment
Increasing levels of personal wealth
O Financial stability
arrow_forward
4- Why was the Dodd-Frank Wall Street Reform and Consumer Protection Act passed?
5-Please briefly discuss what is meant by bank liquidity and bank solvency? Why they are important for the health of banking system?
6- Identify and briefly describe the three traditional instruments that may be used by the Federal Reserve to set monetary policy.
arrow_forward
MODULE 3: THE BANKING LAWS AND REGULATIONS
LEARNING ASSESSMENT M3B
PROBLEMS
1. For each of the following economic changes, predict what will happen to equilibrium
interest rate and quantity of money in the financial market. Sketch a demand and supply
diagram to support your answers. (Letter A is solved/ answered as a sample of how you
are to present the answers for the remaining letters.)
A. Gross domestic product (GDP) in the economy increases.
MS,
i,
MD2
MD,
Quantity of money
Since GDP increase will cause an increase in money demand, this causes the
equilibrium interest rate in the money market to rise. The equilibrium quantity of
money is constant at Q since MS is fixed.
(Now do the rest of the problems.)
B. The BSP changes its bank regulations in a way that makes it cheaper and easier
for banks to make loans.
C. People gain confidence that the economy is growing and that their jobs are secure.
D. Banks that have made loans find that a larger number of people than they expected
are…
arrow_forward
Completed 10 out of 40
O Macmillan Learning
Which is NOT a function of the Federal Reserve?
regulating the U.S. money supply
providing loans to small businesses
serving as the lender of last resort
regulating the U.S. financial system
II
99+
arrow_forward
A16)Which did not happen in the wake of the Great Depression?
A)creation of the FDIC
B)Regulation Q
C)Glass Steagle
D)creation of the Federal Reserve
A17)Separation of Investment banking from commercial banking in 1933 resulted in
A. reducing the size of banks in the US
B. consolidation of banks
C. expansion of banks into out of state
D. the Great Depression
Group of answer choices
A18)Regulation Q is an
A. Interest Rate Floor
B. Interest Rate Ceiling
C. Interest Rate Derivative
D. Interest Rate Game
A19)FDIC was created in ________.
A. 1913 along with the Federal Reserve Bank
B. 1913 along with the Glass Steagall
C. 1933 along with the Glass Steagall
D. 1913 along with the Glass Steagall
A20)When did disintermediation occur on a big scale in the U.S.?
A)1970s - 1980s
B)1996-1997
C)1930s
D)2006 - 2009
arrow_forward
Question 14
Which of the following policy measures by a central bank will contract money supply?
A buying government security through open market operations
B raising the federal funds rate target
lowering discount rate
D lowering reserve ratio
arrow_forward
Question 26
What is the main purpose of monetary policies?
reducing government spending in the economy
controlling the supply of money in the economy
C
reducing government intervention in the economy
controlling the production of goods in the economy
©2021
Illuminate Education TM, Inc.
arrow_forward
19.
Which of the following is NOT an entity of the Federal Reserve System?
Question 19 options:
a)
the Board of Governors
b)
Federal Reserve Banks
c)
the Comptroller of the Currency
d)
the Federal Open Market Committee
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
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Related Questions
- Topic: Federal Reserve and the Central Bank Question : What is the difference between illiquid banks and insolvent banks? How does that difference affect the lender-of-last-resort role of central banks?arrow_forward1 **************** 1) Consider the US Federal Reserve System and compare it with another central bank in a major country, such as the Bank of England, the European Central Bank, the Bank of Japan, the Reserve Bank of India, etc. a)What are two features, characteristics, or practices of the second central bank that you chose to compare with the FED that are very similar to the FED? b)What are two features of that central bank that differ significantly from the FED? Explain. P.S. CHOOSE BANK OF JAPANarrow_forwardGNBS Chapter 16 How do commercial banks obtain funds? What is the role of the Federal Reserve bank? What is a discount rate? What are reserve requirements and how do they work? What is contractionary and expansionary policy? What are some of the policy tools used by the Federal Reserve bank? What is insider trading? What does an investment banking firm do?arrow_forward
- What were the two previous central banks the United States had before the current Federal Reserve system? When was the Federal Reserve established? How old are some other central banks in other countries? Describe in detail how the Federal Reserve is structured and explain how it is mostly independent from political interference? Using ideas like supply and demand, explain how the Federal Reserve uses open-market operations to either raise or lower interest rates at the direction of the Federal Open Market Committee (FOMC). See if you can find what the most recent decision made by the FOMC was concerning interest rates and explain how that will be reflected in its open-market operations.arrow_forwardQuestion 1 What is the role of the central bank in the financial sector and economy as a whole What is the structure of the central bank, highlight the key departments and their functions If government has power to control printing, why can they just not print money to pay debtsarrow_forwardWhat is the role of the Federal Reserve in the United States? A) To provide legal advice to financial institutions B) To conduct monetary policy C) To insure bank deposits D) To offer consumer loans Don't use chatgpt or other ai tool. If you know correct answer then attempt if you gave wrong answer I will give 10 dislikes and more from my friends accountarrow_forward
- 5-Please briefly discuss what is meant by bank liquidity and bank solvency? Why they are important for the health of banking system? Identify and briefly describe the three traditional instruments that may be used by the Federal Reserve to set monetary policy.arrow_forward1) https://openstax.org/books/principles-macroeconomics-2e/pages/15-1-the-federal-reserve-banking-system-and-central-banks 2) https://openstax.org/books/principles-macroeconomics-2e/pages/15-2-bank-regulation 3) https://openstax.org/books/principles-macroeconomics-2e/pages/15-3-how-a-central-bank-executes-monetary-policy please I need a short summary for these articles.arrow_forwardThe Federal Reserve's organization There are 5 , 7, 12 Federal Reserve regional banks. Which of the following contributes to making the Federal Reserve an independent policymaking body? A) There are 12 Federal Reserve banks. B) Its role is written into the U.S. Constitution. C) Members of the Board of Governors are appointed for 14-year terms. The Federal Reserve's primary tool for changing the money supply is choice: the reserve requirement, open-market operation, the discount rate. In order to increase the number of dollars in the U.S. economy (the money supply), the Federal Reserve will choice: buy, sell government bonds.arrow_forward
- Social security in the U.S. is funded by government expenditures current and future taxes the private sector OU.S. private stock and private bond markets Future U.S. deficits could be decreased by increasing transfer payments and decreasing interest payments on the debt O decreasing government expenditures and increasing taxes increasing government expenditures and decreasing taxes decreasing current an future taxes The government budget is in DEFICIT when OT G-Transfers (TR) Interest on the Debt (INT) 0 Government expenditures (G) - Investment expenditures (I) 0arrow_forwardQUESTION 16 Which of the following is one of the Federal Reserve System's two policy goals (also called its dual mandate)? Economic growth Maximum employment Increasing levels of personal wealth O Financial stabilityarrow_forward4- Why was the Dodd-Frank Wall Street Reform and Consumer Protection Act passed? 5-Please briefly discuss what is meant by bank liquidity and bank solvency? Why they are important for the health of banking system? 6- Identify and briefly describe the three traditional instruments that may be used by the Federal Reserve to set monetary policy.arrow_forward
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SEE MORE QUESTIONS
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Recommended textbooks for you
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax