Tags: Money | Federal Reserve | what to know

What You Need to Know about the Fed

By    |   Wednesday, 01 July 2015 05:42 PM

The Federal Reserve serves a vital role in the economy of the United States. While it does not make money — that’s a job for the Bureau of Engraving and Printing and the United States Mint — it is the first stop for billions of dollars printed each year.

The money printed is disseminated to local banks through the Federal Reserve System. The Fed dictates how much money goes into the system and how much money stays in the system. This helps keep the economy in check.

The Federal Reserve Bank was created in 1913 by the Federal Reserve Act. This law, signed by President Woodrow Wilson, was not the first attempt to create a centralized banking system in the United States, but it has been the most successful.

Watch Now: Steve Forbes Slams the Fed in This Video

When the country was young, there were a variety of attempts to standardize U.S. currency, according to federalreserveeducation.org, a website of the Federal Reserve. The first currency was printed as far back as the American Revolution. There was little regulation to the printing of these “continentals” and they soon became worthless.

By the late 1800s and early 1900s the country had faced a series of economic problems, which forced the federal government to turn to wealthy private citizens for bailout. In an effort to turn the course of the country, the Federal Reserve System was established.

The main purpose of the Federal Reserve System is to keep the economy flowing and growing. This happens by the regulation of monetary policy.

The Federal Reserve conducts what is called open market operations. Investopedia describes the process this way: The Fed buys bonds from banks, which puts more money into the economy. This makes the cost of lending cheaper, and generally allows the economy to grow. When the economy is growing, the Federal Reserve can put the brakes on the economy by buying back bonds. This takes money out of the system and it helps keeps inflation from rising too quickly. The Federal Open Market Committee meets eight times a year to set monetary policy.

The Federal Reserve is also responsible for regulating banks. The Federal Reserve Board enforces federal laws and takes action based on compliance with those laws. Enforcement actions can range from fines for large banks engaging in unsafe money practices to baring certain people from the banking profession based on their refusal to follow the rules. The Federal Reserve is responsible for interpreting the laws and making sure U.S. banking institutions comply.

The Federal Reserve is also the “banker” for the U.S. Government. That means all payments from the government come from the Federal Reserve.

New Threat: Glaziev Directive Could Instantly 'Reset' the Value of the Dollar, Destroy Wealth (See Proof)

© 2021 Newsmax. All rights reserved.


   
1Like our page
2Share
Money-Wire
The Federal Reserve serves a vital role in the economy of the United States. While it does not make money - that's a job for the Bureau of Engraving and Printing and the United States Mint - it is the first stop for billions of dollars printed each year.
Federal Reserve, what to know
462
2015-42-01
Wednesday, 01 July 2015 05:42 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved