Who Owns The Federal Reserve?

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Who Owns The Federal Reserve?

The Fed or Federal Reserve bank is not owned by any one single entity; instead, it operates as a governmental branch and represents its own separate agency. According to Macroeconomics 19th Edition, “the objective was to protect the Fed from political pressures so that it could effectively control the money supply and maintain price stability” (McConnell, Brue, Flynn, 2012, p.646). If outside forces or lobbyists were allowed to influence the Fed, they may gain leverage and persuade officials to make decisions that are in their best interest, rather than in the best interest of the country. An example of this may this may include lobbying officials to keep interest rates either high or low. The Fed is …show more content…

According to M:Business, the Fed serves as “the guardian of the American financial system” (Ferrell, Hirt, Ferrell, 2015, p.317). The Fed was established as a means to regulate financial and banking industries. Through this regulation, the Fed is attempting to promote a positive economic atmosphere that includes low unemployment and low levels of inflation. Our business book notes that The Federal Reserve Board has 4 major responsibilities, these include “ (1) to control the supply of money, or monetary policy; (2) to regulate banks and other financial institutions; (3) to manage regional and national checking account procedures, or check clearing; and (4) to supervise the federal insurance deposit programs of banks belonging to the Federal Reserve System” (Ferrell, Hirt, Ferrell, 2015, p. 318). As mentioned above, The Fed uses monetary policy to attempt to control the supply of money available at any one time. In order to accomplish this, the Fed employs four different strategies; these include open market operations, the discount rate, reserve requirements, and credit controls. The most commonly used strategy, open market operations, deals with the decision to buy or sell government securities in the open market. In certain instances when the Fed believes that the amount of money in circulation is too great, they will offer these securities for sale and through the sale of these securities decrease the

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