...Abstract The signing of the Federal Reserve act by Pres. Woodrow Wilson on December 23, 1913 was the event in which the US Government essentially gave control of our country to large banks. With this law, Congress established a central banking system which would control the issuance of money. Since its creation there has been a debate as to whether or not the Federal Reserve Bank has too much power. The misconception is that the Federal Reserve Bank is a branch of the Federal Government in which it is not. America today is at the mercy of a privately owned central bank whose power is left unchecked which has inevitably led to corruption over its citizens and elected officials. Most Americans feel that the United States of America is democratic a leader of the “free” world. This is a well known assumption in theory. Our founding fathers had every intention in turning the new world into a developed democracy, and avoid any authority or one-party power. Our constitution demands that our government be “of, for and by the people,” to be divided into complex units and checks and balances, which are designed to prevent any potential power struggle by one specific branch. The constitution of the United States of America is the perfect blueprint for democracy in the purest form, with power and control in the hands of its citizens. Today, this is not the case. We gave up the right to print our own currency in 1913. The US Government gave the powers to a select few, who have owned...
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...Federal Reserve Bank Lovey Brown ECO/372 August 9, 2012 The United States, was economically influenced by both domestic and global events in 2011. The Japanese earthquake left a major fiscal effect on the world. Monetary situations of importance is the reason states have central banks. These banks act as the state's money directors. Purpose and Function of Money Money has a main purpose and function in the economic world. It functions as a regulation of well-known dealings for government systems. Monetary units can be calculated by the quality of the other forms of currency such as commodities. The economic value of each unit of measurement is normally discovered by the government of which it is settled. In the United States, the Federal Reserve controls the domestic monetary system policy. There are primarily two ways a central bank controls its state's monetary system policy. The Federal Reserve can allocate interest rates to banks acquiring money from the Central Bank. The Federal Reserve can also regulate and set the Federal Reserve obligation for banking organizations. Managing a Nation's Monetary System Without an organization that controls states’ money, there would not only be a diverse nation, and possibly open to improper growth. Our nation faced prevailing economic depressions in the 1800s because of the want of a domestic monetary control system. In 1913, Congress decided that it was necessary to proportion the fiscal...
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...A large number of criticisms have been leveled against the United States federal reserve system. Conduct a web search on the criticisms about the system. Do you agree with these views? Why or why not? What changes would you recommend to the system? While conducting a web search on criticisms concerning the federal reserve system, I found that most of the articles and encyclopedias included the same critiques. One criticism is the Fed’s inability to stop inflation, indicating that inflation was going up at a faster rate than wages, thus leaving people with overall lower wages. (“US real wages fall at fastest rate in 14 years” http://www.ft.com/cms/s/f269a8f4-c173-11d9-943f-00000e2511c8.html) Another criticism involves the legality of the federal system. As others have already stated, the constitution granted the Congress the authority to coin money and regulate the value of the currency. It doesn’t, as Congressman Ron Paul states, “give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.” (“Criticism of the Federal Reserve” http://en.wikipedia.org/wiki/Criticism_of_the_Federal_Reserve) The Fed also stirs up controversy based on the fact that they are owned, through stock issuance, by private member banks, who most likely would not work in the interest of the people. “Charles...
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...to thrift institutions and non-member commercial banks . Question 2 .2 out of 2 points Correct Commercial banks obtain the bulk of their loanable funds from: Answer Selected Answer: depositors Correct Answer: depositors . Question 3 .2 out of 2 points Correct The holding-company device to control two or more commercial banks: Answer Selected Answer: has increased in importance in recent years Correct Answer: has increased in importance in recent years . Question 4 .2 out of 2 points Correct The primary purpose of this Act was to aid the savings and loan industry Answer Selected Answer: Garn–St. Germain Depository Institutions Act Correct Answer: Garn–St. Germain Depository Institutions Act . Question 5 .2 out of 2 points Correct The item on the liabilities and equity section of a bank’s balance sheet that represents the smallest proportion of bank’s assets is: Answer Selected Answer: owner’s capital Correct Answer: owner’s capital . Question 6 .2 out of 2 points Correct The Federal Deposit Insurance Corporation Improvement Act of 1991: Answer Selected Answer: required that failed banks be handled in such a way as to provide the lowest cost to the FDIC Correct Answer: required that failed banks be handled in such a way as to provide the lowest cost to the FDIC . Question 7 .2 out of 2 points Correct The most basic functions of depository institutions are: Answer...
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...account. Societies use monetary units such as dollars in an effort to measure the worth of a wide array of goods, services, and resources. In the barter system it is a lot harder to place a price on one object and the value of another item that will be exchanged for it. 3) Money is a store of value that allows people to transfer purchasing power from the present to the future. However, in the barter system the value of each particular item can vary and change over time. What backs our money? What is important about that? The money supply in the United State is backed by the government’s ability to keep the value of money relatively stable. This is important because the purchasing power of the U.S. dollar is in the government’s hand and can fluctuate. Why is the supply of money in an economy so important? Money derives its value from its scarcity relative to its utility. Therefore, the economy’s demand for money depends on the total dollar volume of transactions in any period plus the amount of money that is held for future transactions. List and briefly describe the 7 functions of the FED. 1) Issuing currency- Federal Reserve Banks issue Federal Reserve Notes 2) Setting reserve requirements and bolding reserves- set the fractions of checking account balances that banks must maintain as currency reserves 3) Lending to financial...
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...IMPORTANCE OF INFORMATION TECHNOLOGY SECURITY Importance of IT Security Table of Contents Introduction .................................................................................................................................................. 2 e-commerce Trends ...................................................................................................................................... 2 Risks .............................................................................................................................................................. 4 Cost of Cybercrime........................................................................................................................................ 6 Prevention Steps ........................................................................................................................................... 7 Conclusion ................................................................................................................................................... 10 References .................................................................................................................................................. 11 1 Importance of IT Security Introduction For the business professional information technology (IT) security is of upmost importance. The reliance that companies have on information systems in conducting everyday business transactions has facilitated the need...
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...Federal Reserve’s Publication Describe the Federal Reserve’s assessment of the current economic activity and financial markets. The U.S macro economy experiencing a notable extended period of economic expansion led to people believing that the U.S’ economy had become less volatile and prone to recession. Our economy’s growth slowed significantly and was threatened to enter the first recession of the millennium in mid-2000. According to the Federal Reserve the situation of our economy can be viewed from two points of view. The first one suggests that the slowdown in our economy is temporary, short-lived, and reversible meaning its recovery can be “V-shaped.” The second one suggests that the recession will last longer, a more drawn out slowdown, and followed by a weaker and more sluggish recovery also called “U shaped” recovery. This later view is associated with asset price deflation as well as burdensome debt. The current economic activity appears to be moving on the right direction and reversing itself into a near-term recovery. Also another aspect of it is the signs of potential risk of longer-term casual factors at work. The suggestion based on the fragility of the economy is that policymakers must be prepared to react and further preventive steps should be considered. Explain the Federal Reserve’s current view about inflation. There are two types of inflation that are closely tied to each other. Monetary inflation is an increase in the money supply. Price inflation...
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...Paul Woods PSC 485 Dr. Edward Kwon 4-14-11 How the U.S Economy affects International Countries The United States of America has the most expansive economic system that out rivals any other country when compared to the U.S. The thought that if the United State’s financial system were to crumble would have a devastating effect for not only the United States but that of every other country in the northern as well as the southern hemisphere. It’s no surprise that the United States is one of the biggest exporter/importers in the world, but when the biggest country suffers economic turmoil, how does it affect the entire international community? The first question that I want to bring to the surface is what kind of impact does the Federal Reserve Bank have upon the United States economy and what exactly do their powers entail? In order to find out why our economy is in the shape it’s in, we must go straight to the source and find out what they are able to do as well as what must be done to keep our economy afloat. The second research question that I want to address covers the economic crisis that occurred in 2008-09, when Wall Street crashed, making it the second worst financial crisis since the Great Depression in 1929. We will deeper and examine the government bailouts and how it affected the GDP of domestic industry and on the international scale. Finally, our third question will be how we can focus our attempts to avoid instances like this in the future. We will look...
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...make an individual in favor or against a certain issue using techniques to speak to the consumer at a subconscious level. Monetary policy by far is a significant factor in the survival and well being of any nation. It can destroy or exalt any nation through policies that effect how the economy and money interact. Ranging from the Reserve Bank of New Zealand, the Bank of Japan, and the Swiss National Bank to the European Central Bank and the Federal Reserve, these banks were deployed to attend the dire need of keeping monetary value stable; at what ever cost. Though for the best interest, centralized banks have helped and hurt their respective economies in many different ways. “During the nineteenth century and the beginning of the twentieth century, financial panics plagued the nation, leading to bank failures and business bankruptcies that severely disrupted the economy. The failure of the nation's banking system to effectively provide funding to troubled depository institutions contributed significantly to the economy's vulnerability to financial panics” (Fox 1). I will be proving, as a liberal, how failed monetary policies of the Federal Reserve were the ongoing cause of the Great Depression. The onset of the Great Depression can be traced back to August 1929. In the fall of 1930, 15 months had passed since the beginning of the contraction; the economy finally began to appear poised for recovery. The last three contractions has lasted an average of 15 months. However,...
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...Complexities of the U.S. Financial System Dr. Marcus Crawford Strayer University, School of Business Complexities of the U.S. Financial System How Do U.S. Financial Markets Impact Individuals? The effects of a collapsing market can effect individuals in several ways. One of those ways is savings. As a result of a declining economy, money becomes more precious, as commodities take precedence over luxuries. College funds, for example, is one of these luxuries. The need to pay for everyday expenditures, such as food, and utility bills, can outweigh the need to save for a child’s college education. As a result, not only may the deposits come to a halt, but withdrawals, may become a common occurrence as well. Individuals may also stop saving for retirement in this same manner, as well. How Does the U.S. Financial Market Impact Businesses? When the market crashes, businesses usually feel its effects immediately. As stated earlier, luxuries, such as dining out, for example, become non-existent, and sales start to decline. Since most businesses have their assets tied into mixed equities, these assets, can be dissolved, quite rapidly. Business begin pulling back on employee benefits, to include health care, dental plans, and matching retirement. To also make up for these losses, companies in cut other expenditures, such as payroll. Usually employees are laid off, to compensate these deficits. How Does the U.S. Financial Market Impact the Economy? With the market...
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...University of Phoenix Author's Note This paper prepared for ECO/372 facilitated by Introduction The Federal Reserve system is the main banking system within the United States. Established by Congress, its primary objectives are to seek full employment for US citizens, ensure price stability, supervise banks via regulation, provide financial services to banks, the US government, and foreign official institutions, and review and stabilize long-term interest rates. A seven person Board of Governors, also known as a federal agency, administers the Federal Reserve. Currently the Board Chair is Janet Yellen, the first woman to hold the position since the Reserve's creation in 1913. The Federal Reserve balances are affected by not only the Board but by the Federal Open Market Committee, which monitors monetary and credit market conditions within the US as well as foreign exchange markets (Board of Governors of the Federal Reserve System, 2015). The Reserve is an essential component in the current monetary and fiscal policy. The president and Congress are policy makers who seek to influence the economy with this monetary and fiscal policy. They seek legislation that changes taxes and increases or decreases government spending and borrowing. Central banks take cues from this legislation and therefore adjust interest rates, reserve requirements, and the buying and selling of government securities and foreign exchange (Horton & El-Ganainy, 2012). By expanding...
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...Term Paper on: The Federal Home Loan Bank System Abstract The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility that currently has more than $1 trillion in secured loans outstanding, mostly to commercial banks and thrifts. In this paper, we document the significant role played by the FHLB System at the onset of the ongoing financial crises and then provide evidence on the uses of these funds by the System’s bank and thrift members. Next, we identify the trade-offs faced by member-borrowers when choosing between accessing the FHLB System or the Federal Reserve’s Discount Window during the crisis period. We conclude by describing the fragmented U.S. lender-of-last-resort framework and finding that additional clarity about the respective roles of the various liquidity facilities would be helpful. Key words: Federal Home Loan Bank, government-sponsored enterprise, lender of last resort, liquidity Table of Contents Introduction The Federal Home Loan Bank System The Role of FHLB Advances during the 2007 Liquidity Crisis Aggregate Balance Sheets Regression Analysis Crisis-Related Lending by the Federal Reserve and the FHLB System Conclusion References Introduction In July 2007, the credit rating agencies (Standard & Poors, Moody’s, and Fitch) responded to the rapid deterioration in the performance of recently originated subprime mortgages by taking a ...
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...debate over the inherent subjugation of public interest in this arrangement raged on as well. Woodrow Wilson, as the winner of 1912 presidential elections, eventually started to shape the conversation towards a formal conclusion and proposed a combination of private and public representation in a central bank. The subsequent passage of the Federal Reserve Act created an institution that balanced centralized control enshrined in the government controlled Federal Reserve Board in Washington, D.C. by establishing twelve privately controlled regional banks catering to the specific needs of twelve geographical regions of the country. Traditionally, the New York Fed has held a prestigious, and somewhat dominating, position among regional banks because of its hegemony over implementing the monetary policy of the Federal Reserve Bank and the fact that most of the financial powerhouses have concentrated operations in New York. Its organizational structure is composed of nine members (three bankers, three non-bankers chosen by the local banks and three members chosen by the Federal Reserve Board of Governors to represent the public); other regional reserve banks have the same structure. By design, this structure is dominated by bankers and can potentially influence Fed’s policy for the benefit of bankers at the detriment of other stakeholders including taxpayers. This concern was particularly evident during the Great Recession. The President of the New York Fed, Timothy Geithner, furiously...
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...History of the Federal Reserve July 12, 2011 Introduction The monetary system within the United States of America is a complex, intricate system. At the top and in control of this system is the Federal Reserve and its board of governors. The “Fed” has had an interesting history within our country since its creation in 1913. It is the central bank of the United States. It is the third such attempt, and the most successful central bank to be formed in America. The creation of the Fed was initially done to stave off financial panics, but the scope and purview of the Fed has grown over time through the enactment of many laws that give the Fed its power. The main focus of the Fed is to regulate, monitor and control the monetary system within the United States. While the Fed has been in existence in the United States it has not been without critics and proponents. Recently the critics have grown in number thanks to the TARP program in 2008 that provided bailout money to companies deemed too big to fail. While this policy is just many in the long history of the Fed, it has brought much attention to this entity that although sanctioned by the government, actually operates independently with exception to bi-annual reports to Congress. Although the Fed has faced many calls of audits and/or accountability, it has done well in the handling of the nation’s monetary policy through a Great Depression, two World Wars, and countless business cycles of boom and bust...
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...States Monetary Policy 8 3. Recent (2011) Direction of Monetary Policy 10 4. Market Reaction to Monetary Policy 12 5. Conclusion 15 6. Reference List 16 1.0 Introduction In macroeconomics, monetary policy is an importance tool to Central Bank and is a policy set by the members of Central Bank. It is an economic strategy chosen by government that authorizes Central Bank to regulate and influence the economic activity by controlling the monetary base flow into national economy. The goals of monetary policy are to promote growth of the economy, stability of prices and reduce unemployment rate. Monetary policy can be classified into two categories, namely expansionary monetary policy and contractionary monetary policy. Although, the objective for the two policies is the same, they adopt different approaches in reaching this objective. Expansionary monetary policy is used when a country is facing a recession in the economy business cycle, whereby it increases the money supply in economy system to meet its objectives. In contrast, where there is a peak in the economy business cycle, central bank will use contractionary monetary policy to reduce the money supply in economy system so as to retard the inflation. For example, the United States, one of the top ten richest countries in the world (IMF, 2011, pp.1), had entered into a recession seen the global financial crisis and faced a slow...
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