United States Federal Reserve System

The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Duties Today[edit]

Today, the Federal Reserve's duties fall into four general areas:

• conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system ^[1]

Like most government institutions, the Federal Reserve System has given unfair preferences to favored individuals. For example, "[i]n September 1998 the Federal Reserve organized a rescue of Long-Term Capital Management, a very large and prominent hedge fund on the brink of failure."^[2] Supposedly "[t]he Fed intervened because it was concerned about possible dire consequences for world financial markets if it allowed the hedge fund to fail," but this stated reason has been disputed.^[3] The more obvious reason for this favoritism was to protect privileged individuals from failure.

References[edit]

1. ↑ Federal Reserve System
2. ↑ http://www.cato.org/pubs/briefs/bp-052es.html
3. ↑ Ibid.