Federal Reserve WILLIE DANIELS

Job Role/Requirements

The Federal Reserve System is the central bank of American and is

composed of twelve national banks spread around the whole

country.

The Federal Reserve job is to make sure our country has low

unemployment rates and also stable prices. To become a member

you must be appointed by the president and congress must

approve.

One main focus of the Fed is monetary policy which helps develop

price stability, stronger employment, lower interest rates, and ideas

to keep the country in equilibrium.

Stability in our Nation

The Fed is Federal Open Market Committee (FOMC) The FOMC can

control the money supply by either cutting the money supply or

increasing the money supply. These methods can help bring down

inflation rates or boost economic growth in an economy.

Basically The FOMC can slow the economy down by increasing

interest rates, or during expansion lower interest rates to make our

country grow.

Having a lot of government spending can cause increased interest

rates.

Stability Continued

If employment rate is increasing, and saving is increasing you

cannot continue running the economy how it was when it was

making changes to become better. There has to be continuous

improvements being made along with reports on the nation’s wealth.

The monetary policy strives to make checks in balances so there is

no recessions, or least amount of recessions possible.

Why create the monetary policy?

During the 1970’s inflation rates were continuing to increase, which

brought the country to a recession in 1981, and 1982.

During the mid-70’s inflation was above 10%, in 81 and 82 inflation

was up to 18% on interest rates.

Monetary Policy

Because interest rates were so high the Fed had to implement

something to stabilize the country and the monetary policy and with

Paul Volcker being appointed to chairman of The Fed in 1979.

Shortly after our nation slowly started to see wealth and economic growth.

Paul Volcker came up with the idea to lower inflation rate which

was to decrease the money supply by limiting the amount of money

being circulated around the economy.

Monetary Policy Contined

The idea of this was to have more control over private bank reserves

by monetary targeting. In 1979 Volcker decided that he would stop

targeting the price of money and targeting the quantity of money.

When Volcker was appointed in 1979 inflation was increasing almost

to 9% a year. On top of that unemployment was reaching 6% and

the U.S dollar had lost a lot of value. A lot of rebuilding to the nation

had to be done after all the inflation had slowly crept its way in.

The next slide will give you an overview on how things continued to

rise and how interest rates were sky high.

Consumer Price Index (CPI)

Federal Reserve

With growth there has to be spending or at least more spending the

government will do.

On top of expanding or government spending there are times

where unexpected events can have a big impact on a country

making it harder to recover, and policies have to be put into place.

The policies put in place do not happen overnight, and it takes time

to recover you have to remain persistent.