The Federal Reserve

I’m very sure especially lately you hear “FED” or “Federal Reserve” a lot. From any discussion of financial, congress or even Ron Paul calling for an audit of the FED, you come across these terms. I just wanted to share a brief overview of FED just so you can see what it is or maybe just give you a refresher.

What is the Federal Reserve System?
Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913, with the hope of creating stable monetary duties. It came about with the Federal Reserve Act which was a response to financial crisis of 1907. In 1907, the crisis was called “1907 Bankers Panic”, which occurred when the New York Stock Exchange fell close to 50% from its peak of the previous year.

Federal Reserve Act
This was enacted by the 63rd United States Congress to provide for the establishment of Federal Reserve banks, to furnish elastic currency, to afford means of re-discounting commercial paper to establish an effective supervision of banking in the U.S. This act granted authority to issue Federal Reserve Notes which is the U.S. Dollar, under President Woodrow Wilson.

Note: Elastic currency is currency the volume of which would be regulated automatically by the demands of the business. According to the Federal Reserve it is currency that can by the actions of the central Monetary authority, expand or contract in amount due to economic conditions.

Duties
• Maintain stability of the financial system.
• Supervising and regulating banking institution.
• Providing financial services to depository institution, U.S. government, and foreign official institutions.
• Conduct the nation’s monetary policy.

There are seven members of the Board of Governors and are nominated by the president and confirmed by the U.S. Senate. There are 12 Reserve Bank Districts consisting of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Also, here is just an interesting timeline.

Timeline of central banking in the United States
 1791–1811: First Bank of the United States
 1811–1816: No central bank
 1816–1836: Second Bank of the United States
 1837–1862: Free Bank Era
 1846–1921: Independent Treasury System
 1863–1913: National Banks
 1913–Present: Federal Reserve System

Resources

1. http://www.federalreserve.gov
2. http://en.wikipedia.org/wiki/Federal_Reserve_Act
3. http://www.econlib.org/library/Enc/FederalReserveSystem.html
4. http://www.federalreserveeducation.org/

Current News

1. Fed oversight of Nonbank Financial Companies is Weighed
2. The Federal Reserve Plans to Monitor Facebook, Twitter Google News
3. Republicans Bash Federal Reserve