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How Does The Federal Reserve Affect The Economy

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Abstract
The Federal Reserve is the central banking system of the United States that was signed in 1913 by President Woodrow Wilson to promote a strong American economy. This independent system provides monetary policies which help create a high employment rate and positive attributes to obtain a stable financial system that benefit the people of the whole nation. It was primarily created to control the money supply and encourage the banks of the country to provide a secure place to ensure the money. However, this system also can create a negative effect due to the way it manipulates interest rates and ability to devaluate currency. Keywords: Monetary Policies, Central Banking System, Regulating Wealth, Money Supply, Inflation, Reserve …show more content…

As result of the frequent bank failures and insecurity that were faced by the whole nation and the Federal Reserve Act was created and clearly stated a prosperity in regulating the wealth and manage the economy of the country. The people of the United States determined the Fed to be a trustworthy bank system that will help the economy of the nation to progress and be equilibrated.
During the early 1900s, the banks in the United States were riskier for investors and were not trusted by numerous people due to the financial conflicts they generated and brought to the country (Beattie, 2007, par.3). The country urgently needed a factor that could control the money supply of the nation and help to maintain the financial system stable. It required a system that could manage the expenses of the country and keep track of the traveling money. As a result, the Federal Reserve was created and it became the central banking system of the United States, providing trustworthy financial systems and securing the wealth of the people and the economy of country. It has the ability to print money and keep unemployment at a low rate in order to keep the nation stable. Additionally, it has the ability to adjust the rate of funds by selling or buying Treasuries in order to keep the nation equilibrated. …show more content…

As it manipulated the rate of inflation, it led the unemployment rate to be as minimum as possible in order to help the community become stable and balanced. The community benefitted because the Fed created numerous job opportunities making the economy of the nation rise and vanishing the crisis. The banking system stabilized the country and increased the economy by making the employment rate increase. The people reacted positively, due to the aid that was provided in order to accomplish

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