The Relationship Between Central Bank Autonomy And Employment

The first editorial, “The Federal Reserve Politicians,” discussing the expanding power the federal reserve has. The federal reserve officials have become the most important economic decision makers in the government. The author believes that under a healthy government the Fed or any party should not have so much power without more accountability.

The Federal Reserve was established as the Central bank of the United States in late 1913. Commonly referred to as “the Fed,” it is responsible for managing currency, money supply, and interest rates (Lecture, 10/6). While the bank is given much autonomy over its actions, it is not independent from the US government in that the legislature is responsible for allowing the Federal Reserve to act freely, and elected officials appoint central bankers. These are two primary mechanisms for keeping the Fed in check, insuring that it is acting in the nation’s best interest (O, 286). Countries with central banks that are independent from their governments tend

It is clear that the economic policy in general and the monetary policy in particular should be concerned with the overall economic well-being. In this paper we propose to discuss this core topic. We will provide an overall picture of the functioning mechanism. In this regard, the discussion will develop around the governmental policies and of FED, and their scope on the free market. The argumentation will refer to the notion of common good and will try to establish if the measures applied by FED have fulfilled their intended purpose given the recent international financial crises of 2007.

The act stated that its purposes were "to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes." After the implementation of the Federal Reserve, several laws were passed to supplement it. Some of the key laws affecting the Federal Reserve Act are the Banking act of 1935; the Employment Act of 1946; the 1970 amendments to the Bank Holding Company Act; the International Banking Act of 1978; the Full Employment and Balanced Growth Act of 1978; the Depository Institutions Deregulation and Monetary Control Act of 1980; the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; and the Federal Deposit Insurance Corporation Improvement Act of 1991. In two of the above-named acts, Congress defined the main goals of national economic policy. These acts are the Employment Act of 1946 and the Full Employment and Balanced Growth Act of 1978. The main goals of the Federal Reserve are economic growth, a high level of employment, stable prices, and moderate long-term interest rates. The Federal Reserve System is considered to be an independent central bank. It is an independent central bank only in the sense that its decisions do not have to be passed by the

The Fed is an independent central bank. Its decisions are not ratified by the president or any other government institutions. However, the Fed has to report to the Congress. The book of the Federal Reserve System (1984, 2) uses the term of “independent within the government”, since the Fed has to work within the framework of the objectives of economic and financial policy

The Federal Reserve, Bureau of Labor Statistics, Department of Labor, Department of Commerce and Treasury Department play crucial roles in the value and availability of money in the USA economy. First, the Federal Reserve is the central bank of the United States. It is run by a Board of Governors appointed by the president and serves as a bank to banks. It performs five general functions to promote the effective operation of the U.S. economy. One, it conducts the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. Second, it promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the

The first tool the Federal Reserve has for influencing the economy is through the federal funds rate. This allows a change in interest rates which means that banks may have to pay a higher or lower interest rate to the Federal Reserve for borrowing money. If the rate is increased it slows down the economy because the cost for money and credit is increased as well, but if the rate is decreased the economy is more likely to grow because money then becomes more available for investment and growth. The second tool used to influence the economy is through the purchasing or selling of federal debt. Selling federal debt tends to slow down the economy because people are less likely to invest. Buying federal debt tends to help the economy grow by allowing

If the Federal Reserve saw or presumed that the monetary policies on economic stability were directly related to employment growth, then they were right to just serve one mandate of price stability. It was correct to argue that when the economic policies of a nation are favorable, the economic status of the country will grow. It is during economic growth when there are investments in the economy that attracts employments. When the economic growth is favorable, the lending of a nation will be better and thus self-employment will be evident. Therefore, the two mandates could be effectively joined into one another (Lalonde, & Parent, 2006).

In order for the Federal Reserve to fulfill their goal of moderate long term interest rates, stable prices and maximum employment, they rely on developing strategic changes to the monetary policy. Through monetary policy changes, the Federal Reserve can either restrict or encourage economic growth and inflation, thereby molding the macroeconomy into a state of consistent health. Overall, there are three tools used to modify the monetary policy, they include reserve requirements, discount rates, and open market operations. In an effort to promote price stability within the economy, these tools influence monetary conditions by affecting interest rates, credit availability, money supply and security prices. While one tool is use more frequently than the others, all three are necessary in establishing stable economic conditions.

The Federal Reserve System, often referred to as the Fed, is the United States central bank. It was created by Congress to provide the nation with a safer, more flexible and stable monetary and financial system. The Fed is an independent institution that is to some extent influenced by the government. It is under the supervision of the congress. On the other hand, as an independent body, the Fed has the power to act freely, without its decisions being ratified by the President of the United States, the Congress or any other executive member of the government and is structured to be economically independent. The Fed is also composed of twelve numbered districts, each with its own Federal Reserve Bank.

In the 1951 the United States Treasury and the Federal Reserve noticed the need for the Fed to acquired their independence. This notion of independence was created by the passing of what is formally known as the Treasury-Federal Reserve Accord. The 1951 Accord was “agreement between the U.S. Secretary of the Treasury and the Federal Reserve Board on government financing and monetary policy. The accord represented the resolution of a major conflict between the Treasury and the Fed over World War II financing. Perhaps most significantly, the accord gave the Fed independence from the Treasury.” Though, the Accord provided the Federal Reserve with their first taste of freedom, it more importantly liberated monetary-policy from the grasp of politicians.

No one wants their freedoms muted, stolen, seized, or threatened. Our nation struggled for eight years in the American Revolution, to break the choke hold of Britain on Americans. After the war was over and America was independent, there had to be a plan. Where were all these free people going to go? Were they going to settle across the land and live like the indians that inhabited the places around them? That might have not been a bad idea, but just as the indians were kicked out of their home by Americans, any other foreign power would have eventually done the same to Americans. Helen Keller makes a good point when she says: “The most pathetic person in the world is the one who has sight but no vision.”

Therefore, they have to ensure there is a total accountability in the central bank of the United States. The system is also considered independent since it does not receive the funds appropriated by the Congress. Moreover, the independence enjoyed by the Federal Reserve ensures that the terms of office of the members of the Board of Governors multiples that of the presidential and the congressional terms. The Federal Reserve is only able to work and yield good results if left to operate fully on its own, uninterrupted by the Government.

17) Which of the following banks are required to be members of the Federal Reserve

Secondly, the fixed dollar-pegged exchange rate system and monetary policy, the independence of the existence of a fundamental conflict, undermine the effectiveness of monetary policy cannot meet the needs of economic development. Monetary policy autonomy is essential for China’s macroeconomic stability; monetary policy should take precedence over the independence of significant exchange rate stability. But the Yuan against the U.S. dollar exchange