Role of the Federal Reserve System in Designing and Implementing US Monetary Policies

Topics: Monetary policy, Federal Reserve System, Central bank Pages: 2 (531 words) Published: March 28, 2014
Role of the Federal Reserve System in Designing and Implementing U.S. Monetary Policies. This week’s reading material proved to be very informative as well as eye opening. There was a lot of information covered concerning the Federal Reserve System that we all found to be very interesting. According to (Colander, 2010), “Money is a highly liquid financial asset that serves as a unit of account, a medium of exchange, and a store of wealth,” before this class we never really looked at money in this manner. We all know that money can be used in many ways for many things, but before this class we never really stop to ponder the role of the Federal Reserve System and the part it plays in implementing U.S. monetary policies. “The Federal Reserve Act was established on Dec. 23, 1913. The main function of this politically independent entity is to set the nation's monetary policy and to step in as a lender of last resort by providing emergency liquidity to prevent a collapse of the country's financial pipeline”. (Srinivasan, para. 1) Most recently our economy experienced a government shutdown and no one liked the outcome of the shutdown. The shutdown left many of us wondering, where on earth do we go from here and how will the government ever bounce back from this tragedy. This week’s material helped us to better understand the goals that are implemented by the Federal Reserve System. “The six main goals of monetary policy (and by extension, of the Fed) are price stability, high employment, economic growth, financial market and institution stability, interest rate stability and foreign-exchange market stability.” (Mann. para. 2) We all understand that when prices are stable consumers are more prone to spend money. When employment rates are high people are placed in a situation that allows them to make money as well as spend money. When people are spending money this causes economic growth. Foreign –exchange markets are more conducive when the markets are stable verses...
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