America’s Super-Bank

The Federal Reserve; you might have heard the term before on the news channel before. It seems to be part of the government, but do you really know what it is or does?

The Federal Reserve (Fed) is America’s central bank, an organization that oversees American banks and controls monetary policy. It exists primarily to be the lender of last resort, stabilize the economy, and prevent/mitigate financial crises. These crises are generally caused by a lack of confidence in the economy; when this weakness is present, the Fed is responsible for easing credit (lowering interest rates makes it easier to borrow money) and providing liquidity (making loans or buying bonds from banks, giving them immediate cash). The Fed also works with the executive branch to stimulate the economy through the creation of jobs and the FDIC (Federal Deposit Insurance Corporation) to ensure citizens that bank deposits will be secure.

When my paper comes out, you can read a little bit more about how it helped America recover from the Great Depression and 2008 recession.