I dont know what the federal reserve does someone please explain it to me
I dont know what the federal reserve does someone please explain it to me
John Ross
James Murphy
The federal reserve does nothing. It's a cultural myth, human!
Lucas Peterson
it is the storehouse where we keep our federal. if the federal escapes, america will no longer be the 'united states,' but simply 'states,' so be careful.
Blake Scott
it controls interest rates and the flow of money to attempt to keep the US economy stable, to put it in the absolute simplest terms.
if you read some of the Beige Books that have been released to the public, you'll get a better idea on what they do.
Robert Ramirez
thank you for good answer :)
I know that they want to maximize stable employment as well but i dont know how they do that
Cameron Jenkins
The Federal Reserve (aka The Fed) does many things. Such as control the interest rates by buying or selling US Treasury bonds with money it either electronically creates or destroy. So it affects how much money exists, as more money gets created every year the value of each currency unit goes dow (i.e. prices go up).
Banks also have to keep money "on deposit" at the Federal Reserve, equal to 10% of their total deposits. This is to limit how much money the bank lends, as well as supposed to act as a cushion in case lots of people want to take their money out of the bank. (the types of loans the banks can make and to what percentage are governed by the Basel accords, an international agreement made in Basel, Switzerland).
The Federal Reserve also gets cash to private banks when they need more of their assets in cash form due to customer demand. They can take some of the funds the banks have on deposit and convert that as cash. The Fed in turn gets the cash and coins by buying it from either the Mint or the Bureau of Printing and Engraving. For example, the Fed buys quarters from the Mint by buying them at face value. The difference between the cost of making a quarter and the face value of the quarter, is a "profit" for the Mint, and how it pays for its operation (i.e. not from tax dollars).
Those are some of the major things the Fed does.
Robert Robinson
thank you 4 gud answer :)
Brayden Ortiz
pretty much everything that said affects inflation and the flow of money in the US, which has an inverse relationship with unemployment.
when the inflation rate is low and the fed can reasonably decrease their interest rates, businesses are able to take out loans for cheaper, which also allows them to hire more people.
however, the opposite is true for when the inflation rate gets too high.
pic is of the philips curve, which details the relationship between inflation and unemployment mentioned earlier.
Jackson Hernandez
They want to "maximize employment" by keeping interest rates low. That makes people borrow money to buy stuff or expand business, which is supposed to "stimulate" the economy. On the other hand, the Fed is supposed to promote "price stability". Since the Fed lowers interest rates by pouring newly created money into the system, they can't do that too much or there is too much inflation. Which is against their mandate of "price stability". So really, their two mandates are in a way contradictory of each other.
Of course, interest rates are the "price of money", and should be allowed to fluctuate naturally. When the economy slows, interest rates naturally drop, stimulating the economy. When economy is red hot, interest rates naturally rise, slowing things down. But the Fed in their wisdom thinks they can do better by artificially controlling interest rates, but this causes a lot of problems. It's like getting hopped up on caffeine or cocaine to stay awake, seems good until you crash. In the long term, you are better off just getting good sleep naturally.
Dominic Adams
A good book that outlines the workings of the banking system and the Federal Reserve is the relatively short book "The Case Against the Fed" by Murray Rothbard.
Kayden Sanders
It's not really worth worrying about.
Zachary Long
wowe
do you know about keynesian economics as well?
James Cook
i don't know why you're asking me that to be honest, especially since has given a way more in-depth answer and could probably be more helpful to you.
Levi Anderson
the Federal Reserve does alot of good stuff buts its complicated and boring
always support your Fed
Brandon Johnson
The federal reserve prints money as much as they need to to control the value of the dollar and because of that technically we don't have a free market.
We used to, though, every dollar used to have a tiny bit of gold in it and that would give it value. Ron Paul wants us to do that again instead of having the federal reserve exist.
Aaron Martinez
I just thought you might know :(
Levi Lewis
MiniTru
Kayden Lopez
don't make me feel bad about it, man.
if you want the gist of different economic ideas, investment terms, etc then check out investopedia.
it's a pretty simple site that puts stuff into layman's terms and will occasionally have videos about things.
of course, it won't be as insightful as a book on any specific subject but it'll be enough to help you understand it.
Benjamin Campbell
thank you user
you are nice :)
Michael Hall
In fact, "dollar" originally was a unit of weight, like a pound (like how the currency in England is called the pound, get it?)
Since the American Revolution a dollar was defined as 1/20 ounce of gold. If you had a one ounce gold coin it was stamped $20.
If you had paper money equal to $20, you could get it as gold. this was all true from the 1790s until the 1933. In the depression president FDR "revalued" the dollar as $35 is 1 ounce of gold, at the same time he made private ownership of gold coins and bullion illegal and individuals could no longer trade their dollars for gold, though big institutions and foreign governments could still exchange dollars for gold at a rate of $35/ounce. This held true until 1971, when president Nixon suspended the ability to trade dollars for gold. Ever since, the dollar has nothing at all to do with gold.
So, gold had a fixed price of first $20 per ounce, then $35 per ounce. Now the market price of gold is $1350 an ounce. You could have bought gold for $35 in 1971, and sold it for $1350 today.
Anyway, the banks and the government did not like the gold standard, because they could only create new money to the extent they had enough gold to cover exchanges (not 100%, just enough to cover demand).
Now there are no limits, the gov and fed can create as much money as they think the economy will bear, which enriches the gov and the banks at the expense of the common people.
Evan Rodriguez
I'm know a good deal about it, and I'm not a fan. Best to read a book about it.
And then read contrary theories. Bastiat is a good introduction to some sane economic thinking.
Keynes whole thing was how government and the banks could control the economy for better. Since that's what powerful people wanted to hear, Keynes became their favorite economist.
He had a lot of funky ideas, like stamping expiration dates on cash.
Keynes is the "better living through chemistry" type economist, vs. The "eat right and exercise" type economists.
Chase Brown
> Austrian School economist
Oof cringe
Joseph Nguyen
thank you user I will try my best to learn
Josiah Wilson
kiwi poster with lowercase typing style and descriptive filenames is so cute
Michael Bailey
The fact that you cringe is cringe
Easton Morgan
Kevin Richardson
Jacob Roberts
I only cringe because I am not nearly educated enough on economics to come up with a reasoned position nand it is just a gut reaction as a result of my political beliefs.
Chase Powell
nice
Mason Scott
Sauce please I am intrigued
Austin Taylor
Sauce for this one sorry
James Sanchez
Fair enough
Ryan Rodriguez
Little goat by kishibe
Nicholas Hill
Much obliged
Lincoln Wood
Fucking Google it retard
Jacob Howard
Now forget everything people said to you.
All Fed does is pretends to know shit. You see, 99% of stock is based on what the fed does and price for all major corporation correlates with interest rates fed sets up. Silver lining is they either don't know what the fuck they are doing or actually deliberately pushing economy to a collapse point endorcing hyperinflated loans.
tldr: its all a massive scam