Fed Up Research Paper
Fed Up
Many Americans are “fed up” with the powers of the Federal Reserve, known as the Central Bank of the US. The Federal Reserve, or Fed, is responsible for maintaining a stable, flexible financial system in the US through its functions — overseeing commercial banks, enforcing laws for consumer borrowing, and acting as the government bank. The Board of Governors, a group of seven selected governors, controls the Federal Reserve by guiding monetary policy. In addition to the role of the Board of Governors, the Federal Open Market Committee (FOMC) possesses the vital role of making decisions on the nation’s money supply. The FOMC is able to lower and raise interest rates, or, in other words, manage the nation’s money supply. The Federal …show more content…
For example, increasing the money supply would stimulate the economy; however, inflation could raise prices, which would not be beneficial for consumers. The act would discourage business practices because of rising prices. On the other side, deflation could also slow economic growth, which may lead to a recession or depression in the business cycle. Unemployment would increase and per capita income would decrease. In addition to adjusting the money supply, the Fed can also change interest rates. Interest rates can influence a business to borrow money, which could potentially expand the business. More successful businesses lead to more job opportunities, and higher living standard. Although interest rates can encourage business practices, the result can also be negative. Rising interest rates may discourage businesses from investing because it would be expensive. The business would shrink in size and force them to fire …show more content…
Just like the Fed’s ability to encourage business practices, it could also distress business practices and thus citizen’s lives. The discouragement of business practices could directly or indirectly result in unemployment, lower income, and less job opportunities. Conversely, businesses are able to thrive from the Federal Reserve’s power. Essentially, the Fed is constantly checking up on the economy, which allows them to balance out any inconsistencies. That way, the Fed can do everything is power to prevent an economic recession or depression. Regardless, the Federal Reserve is essential for maintaining the state of the economy because it is the only institution that has this amount of
Many Americans are “fed up” with the powers of the Federal Reserve, known as the Central Bank of the US. The Federal Reserve, or Fed, is responsible for maintaining a stable, flexible financial system in the US through its functions — overseeing commercial banks, enforcing laws for consumer borrowing, and acting as the government bank. The Board of Governors, a group of seven selected governors, controls the Federal Reserve by guiding monetary policy. In addition to the role of the Board of Governors, the Federal Open Market Committee (FOMC) possesses the vital role of making decisions on the nation’s money supply. The FOMC is able to lower and raise interest rates, or, in other words, manage the nation’s money supply. The Federal …show more content…
For example, increasing the money supply would stimulate the economy; however, inflation could raise prices, which would not be beneficial for consumers. The act would discourage business practices because of rising prices. On the other side, deflation could also slow economic growth, which may lead to a recession or depression in the business cycle. Unemployment would increase and per capita income would decrease. In addition to adjusting the money supply, the Fed can also change interest rates. Interest rates can influence a business to borrow money, which could potentially expand the business. More successful businesses lead to more job opportunities, and higher living standard. Although interest rates can encourage business practices, the result can also be negative. Rising interest rates may discourage businesses from investing because it would be expensive. The business would shrink in size and force them to fire …show more content…
Just like the Fed’s ability to encourage business practices, it could also distress business practices and thus citizen’s lives. The discouragement of business practices could directly or indirectly result in unemployment, lower income, and less job opportunities. Conversely, businesses are able to thrive from the Federal Reserve’s power. Essentially, the Fed is constantly checking up on the economy, which allows them to balance out any inconsistencies. That way, the Fed can do everything is power to prevent an economic recession or depression. Regardless, the Federal Reserve is essential for maintaining the state of the economy because it is the only institution that has this amount of