Federal Reserve Case Study Memo

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To: New Employees Date: 10/19/2015
From: Sandra Flores (Consultant)
Subject: Training on the basic fundamentals of the U.S. financial system.
Dear new employees;
The purpose of this memo is to inform you about how banking and financial system have been improving and the different conflicts that monetary policy and the Federal Reserve had in managing and controlling the economy of the country.
Knowing this basic fundamentals of the U.S. financial system, you will be able to understand where the economy came from and where it is heading. You will better comprehend the policies and regulations of our financial system which help you to be a better asset to the company.
Back in time there was …show more content…

The inelastic currency was creating conflicts in the negotiations and trades between rural and urbans. During George Washington presidential term, Alexander Hamilton Treasury Secretary at that time, established the first Central Bank in 1791 which lasted for 20 years. Thomas Jefferson and their followers felt doubt and uncomfortable to leave too much power for few hands. Jefferson pointed that the creation of a bank is unconstitutional (The American Dream Film-Full Length). Hamilton initiated the idea of a national bank with his solid reasons; Finance revolution wars, create more uniform currency and the availability to lend and credit nationwide. When the charter expired, the Congress did not renew it. In 1816, President Madison signed the bill that authorized the Second Bank of the United States which lasted for 20 years, this one also was not renewed. There was no central bank for 75 years until the Federal Reserve passed in 1913.During that time, there was no regulations which resulted in many conflicts. The Free Banking Era, as many people call it, allowed anyone to open a bank with minimum requirements. State- chartered and unchartered banks started issuing their own notes making

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