The Purpose Of The Federal Reserve System

The Federal Reserve System has four main objectives that it wishes to provide for the economy. These objectives, which are in no particular order of importance, are to conduct the nation's monetary policy, supervise and regulate banks as well as other important financial institutions, maintain the safety of the financial system from risk, and oversee the nation's payment systems. These goals include the Fed's process of fiscal policy as well, which is government taxation and spending on public works such as highways, educations, and social programs. Monetary policy deals with changing the interest rates for banks to either stimulate or dampen borrowing and spending in the economy, with the goal of keeping the economy at a stable and manageable
One of the initial proposals of the system was to have one centralized bank and handle all further operations from this central bank. This idea was extremely opposed by many as this would result in too much power in the hands of a few men. The next proposal issued, December 1912, was the idea of twenty or more banks that were privately own that would handle regional transactions in additional to, again, a central control bank that would oversee the rest of these banks. This idea, suggested under Wilson, would be the foundation for the final motion towards the creation of the Federal Reserve System. Before the act was created, a Reserve Bank Organization Committee was initiated and determined that no less that eight but no more than twelve banks would be made, each in its own city and then the nation would be split into regions, each containing a national bank. One popular region of discussion was the New York Fed, as New York was an especially important in dealing with international affairs. Some supporters of the New York Fed argued that it should carry the highest percentage of the reserve system, some desiring as large as fifty percent, to receive international recognition. Thus on April 2, 1914, the Reserve Bank Organization Committee announced its decision to have twelve Federal Reserve Banks to oversee the country and, much to the satisfaction of
Firstly, ever since its creation in 1913, the purchasing power of the dollar today has immensely decreased by about 95 percent. This effect has been increasing ever since gold stopped being the standard backing our currency. The original goals of the Fed was to control the business cycles of peaks and troughs, but it also proved to be unsuccessful through the boom between 2000-2007 and the, now considered, “Great Recession” of 2008. Nonetheless, one could argue that the Fed has been pretty successful as it was and is able to handle economic crisis's in a manageable amount of time. The most recent example of this would again be the “Great Recession” where the Fed constantly lowered the interest rates for banks to a point where it reached historically low rates of 0.25%. Though it happens to be a slow recovery, the Fed's interference and decisions to be active on this recovery process, rather than being passive and biding time to see if the cycle would begin to process towards a peak again, enabled the recession to only last from December 2008, to it “officially” ending the the second quarter of 2009. This is despite unemployment peaking to about 8% in September of 2012. My opinion of the Federal Reserve System is that though it could use a bit of tweaking as the law is 100 years old, I believe the act is considerably important to our economy and stability. And efforts are