Essay on The Federal Reserve System

2820 Words May 2nd, 2005 12 Pages
The Federal Reserve System
Why do a research paper on the Federal Reserve System? This is a question we went over in our heads while making a decision on the type of research paper to do, what we wanted to learn more about and why. Over the past few years we have realized the impact that the Federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and interest rates on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such a control
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Another control occasionally used by the Federal Reserve Board is that of changing the margin requirements involved in the purchase of securities. The Federal Reserve System was founded by Congress in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system. Over the years its role in banking and the economy has expanded. Today the Federal Reserve's Duties fall into four general areas:
$ Conducting the nation's monetary policy by influencing the money and credit conditions in the economy in pursuit of full employment and stable prices.
$ Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system to protect the credit rights of consumers.
$ Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
$ Providing certain financial services to the United States government, the public, financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments system.
Before Congress created the Federal Reserve System, periodic financial panics had plagued the nation. These panics had contributed to many bank failures, business bankruptcies, and general economic downturns. A severe crisis in 1907 prompted
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