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The Power of One Man in the American EconomyBY: Guest | Category: Finance | Post Date: 2010-01-31
In January of 2010, congress voted to give the chairman of the Federal Reserve, Ben Bernanke, a second term. Though the decision was split pretty much along party lines, each side had their reasons for voting as they did. One democrat stated that Ben Bernanke managed the economic crisis well, while vocal republicans felt that Bernanke just didn't do enough. The Federal Reserve is the central banking system of the United States. Though its role has expanded over the years, according to the Fed's publication The Federal Reserve System: Purposes and functions, 'It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system' (page 10). The four main ways that the aforementioned publications attribute to the Federal Reserve are: * "Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates; * Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers; * Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets; and * Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system." With this as the Federal Reserve's job de script ion, what is the power that the chairman of the Federal Reserve has? Ignoring the nuts and bolts for a moment, the chair of the Federal Reserve sets the economic tone for the country. He reports to congress at least twice a year on the country's economic progress and goals (though in 2009 Ben Bernanke testified before congress thirteen times). However, the real power of the chair of the Federal Reserve is in his power to affect the global marketplace. The Federal Reserve's actions affect the value of United States currency around the globe, the rate of inflation, and even the unemployment rate. By raising or lowering short-term interest rates, the Federal Reserve can either encourage or discourage investment or lending. This seemingly simple act affects every aspect of the U.S. economy. The world financial system is in many ways a system based on trust. If individuals don't trust financial institutions with their money, they won't invest their money in stocks, bonds, international currencies, other areas, or even banks. Though there is a certain amount of acceptable risk inherent in any investment, if the risks are too high, people won't feel comfortable investing. The Fed is responsible for maintaining an atmosphere of trust in the market in order to keep the wheels of the economy moving. Whether or not you agree with Time magazine naming Ben Bernanke as their person of the year for 2009, Bernanke's influence reaches into every aspect of your life. Article Source: http://www.writearticles.org About Author / Additional Info: Additional Articles: * God of 22nd century * Finding Something Truly Unique on the Internet * Hollywood Hunks and Movie Maidens: Age gaps in entertainment * Relocating to Ljubljana Slovenia * Taking Care of Your Pet Ferret Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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