The Federal Reserve
When you look up the word money in the dictionary, you get this as the definition: "A commodity, such as gold, or an officially issued coin or paper note that is legally established as an exchangeable equivalent of all other commodities, such as goods and services, and is used as a measure of their comparative values on the market." Money has three basic functions: a medium of exchange, a measure of value, and a store of value. Goods and services are paid for in money and debts are brought upon and then paid off in money. Without money, economic transactions would have to take place on a trading basis. But who controls all of our countries money? Back in the early nineteenth century our country was experiencing major national banking panics. One of the most remembered of these panics was the Banking Panic of 1907. Abram P. Andrew, secretary of the National Monetary Commission collected nearly two hundred samples of different bank currencies created to stem the 1907 panic, and he provided a description of the banks' problems at that time: [The banks] were so singularly unrelated and independent of each other that the majority of them had simultaneously engaged in a life and death contest with each other, forgettin
Kaplan, Charles J. Introduction To The Federal Reserve. The Fed has three main policies in which they influence the way banks operate. They are the legal reserve requirement, the discount rate, and open-market operations. Each policy powers the reserve and lending capability of banks. The discount rate is not usually a potent control, but it is important for it may point to the direction that the Federal Reserve policy goes. The legal reserve ratio is a powerful policy, but changes in it are rare. Open-market operations have a direct impact on the market and are one of the most important ways the Fed controls the money supply. Grimes, Paul W. Register, Charles A. Sharp, Ansel M. Economics of Social Issues 15th ed. McGraw-Hill Co., Inc. 2000. Pages 343-348. The Region. Born of a panic: forming the Federal Reserve System. http://woodrow.mpls.frb.fed.us/pubs/region/reg888a.html. August 1988 The Federal Reserve System is also dubbed with the name The Central Bank of the United States. Today the Fed is comprised of twelve regional Federal Reserve Banks spread across the United States. They are located in New York, St. Louis, San Francisco, Chicago, Atlanta, Cleveland, Dallas, Philadelphia, Richmond, Minneapolis, and Kansas City. If you look on the left side of a dollar, you can see which branch it was manufactured at. Each branch acts as a central bank for private banks in their region. Back in 1980 The Monetary Control Act resulted that all banks are subject to regulation of the Federal Reserve. Before this act, banks could choose whether or not they wanted to be "members" of the Fed. After the act was passed, all banks are required to be a "member". The discount rate is the rate of interest that the Federal Reserve Bank charged other banks when banks borrow from them. If the
Some common words found in the essay are:
Federal Reserve, Monetary Commission, Whoever Fed, Reserve Bank, , Board Governors, Committee FOMC, Kansas City, Reserve Act, Woodrow Wilson, federal reserve, excess reserves, discount rate, money supply, federal securities, legal reserve, federal reserve system, private banks, reserve ratio, open-market operations, reserve system, banks excess reserves, legal reserve ratio, federal reserve act, buys federal securities,
Approximate Word count = 1228
Approximate Pages = 5 (250 words per page double spaced)
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