Alan E. Simpson
University of Phoenix
Principals of Economics
September 18, 2010
The United States Federal Reserve Monetary Policy
The purpose and function of money is meant to facilitate trade instead of using livestock and or gold we have paper printed by the government. The markets give value to money by determining what prices are paid for a variety of goods and services. The printing of too much money destroys the proper function of money as in the current case of this government’s administration. The function of money is for the bettering of life, and the printing of too much money will ultimately lead to the devaluing of money. The United States Federal Reserve also known as the Central Bank of America manages our supply of money and credit in the attempts to keep value to the dollar. The central bank manages our nation’s monetary system by keeping the wheels of business rolling with currency, and payments services. The central bank also serves as the banker for the federal government by providing financial services for the U.S. Department of the Treasury. As well as supervising and regulating a large share of the nation's banking and financial system the central bank also administers banking and finance related consumer protection laws (The Meaning of Money, 2010). Our nation requires a money manager because money and credit are the lifeblood of the economy; they facilitate commerce, job creation, and business growth. If money and credit expand too rapidly, businesses cannot produce enough goods and services to keep up with increased spending and prices may rise, causing inflation. If the flow of money and credit decrease too quickly the spending and business activity may drop, workers may lose their jobs, and a recession would result. The Federal Reserve controls the open market operations, the discount rate, and the reserve requirements. Using these...