Federal Reserve System Analysis

According to Amadeo (2017), the federal reserve system is the central bank of the United States of America. what makes it very powerful is, its uniqueness as the only performer of the U.S. economy. This suggests that the federal reserve system has the same influence in the entire world. Some critics accuse the federal reserve system as a secretive society that controls the money of the whole world, but it is not. The federal reserve system has four functions. The most important and obvious function is to organize and carry out monetary policy. It manages inflation and keeps stable prices. The main purpose of this fiscal policy is to maintain a right economic evolution. Second, The Fed oversees and organizes many of the U.S. banks as a method to keep the consumers' affairs safe and protected (Amadeo, 2017). Third, Third, the Fed preserves the solidity of the financial markets and restricts any potential …show more content…
According to Morris, et al., (2011), “Often the Fed is said to be the most powerful agency in the government after the Executive Office of the President. Its decisions affect interest rates, employment levels, and economic growth rates.” (p. 566). For example, the Fed reflects an indirect influence on the job market policy. This means when The Fed elevates the federal funds average, the economic policy will be affected. This proposes increasing the percentage of unemployment. In addition, to lowering the opportunity for more raising on salaries as a technique to constrain inflation (Lewis, 2017). Moreover, the housing policy is another field that would be affected by the decision of the Fed. According to Lewis (2017), "Sometimes mortgage rates go up when the Fed increases short-term rates, as the central bank’s action sets the tone for most other interest rates. But sometimes mortgage rates fall after the Fed raises the federal funds {sic} rate" (para,