The Federal Reserve Is The Central Banking System Of The United States

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he Federal Reserve is the central banking system of the United States, which controls the monetary policy of the US (Hubbard). When first conceived in 1913 its primary function was to protect banks, but, in part due to the Great Depression, the role the Federal Reserve plays in the economy has evolved into something much more influential. Ben Bernanke, the Federal Reserve chair from 2006-2014, said in a speech in 2002 while he was still just a board member regarding the Federal Reserve’s role in the Great Depression: “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again” (Moratta). This was an important admission that showed the flaws in the Federal Reserve’s decisions back then, while also foreshadowing the role it will have in the Great Recession of 2007-2009. The Federal Reserve today has a much wider range of functions within the economy and government, and it is one of the major influences not just in the US economy and financial system but the world as well.
When the Federal Reserve was created in 1913, it was done so with the intent to help banks survive bank runs, which is when a lot of investors seek to pull their money out of the bank at once (Hubbard). It was going to do so by providing to back up that banks with liquidity, or the ease to which an asset can be
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