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The Federal Reserve System

The Federal Reserve System. Kevin Mittler. History of the Federal Reserve. Created in 1913 by the Federal Reserve Act Several attempts at a central banking system had been made before. Video Clip. We will now watch a brief portion of the following video

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The Federal Reserve System

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  1. The Federal Reserve System Kevin Mittler

  2. History of the Federal Reserve • Created in 1913 by the Federal Reserve Act • Several attempts at a central banking system had been made before

  3. Video Clip • We will now watch a brief portion of the following video • http://www.youtube.com/watch?v=iYZM58dulPE

  4. Mission of the Federal Reserve • Pursue maximum employment, stable prices, and moderate interest rates • Provide supervision over the nation’s banking to ensure stability and protect citizens • Maintain stability and minimize risk in the financial system

  5. Functions of the Federal Reserve • Protect against runs on banks • Expand and contract the supply of money • Act as a central bank • Set monetary policy • Open market operations • Discount rate • Reserve requirements

  6. Federal Reserve Notes • Currently printed currency of the United States • A form of fiat money

  7. Structure of the Federal Reserve • Both public and private aspects • Independent within the government • 4 major parts: • Board of Governors • Federal Reserve Banks • Member Banks • Federal Open Market Committee

  8. Board of Governors • 7 members who serve 14 year terms • Appointed by the President, confirmed by the Senate • Chairman and Vice-Chairman designated from the board by the president to serve a 4-year term

  9. Federal Reserve Banks • 12 Federal Reserve Banks • 25 Branches • Regulated by Board of Governors • Each bank has its own board of directors and president

  10. Map of Federal Reserve Banks

  11. Federal Open Market Committee • Consists of Board of Governors and 5 representatives from Federal Reserve Banks • Makes decisions about interests rates and size of money supply

  12. Member Banks • Privately owned • Must buy stock in regional Federal Reserve Bank • All national banks, some state banks

  13. Criticisms • Anti-free market • Favors New York City • Legality • Great Depression • Private aspects • Lack of Transparency

  14. Conspiracy Theories • Creation of Federal Reserve • New World Order • Involvement in JFK assassination

  15. Recent Proposal • Proposed by Senate Banking Committee Chairman Christopher Dodd • Drastically reduces power of the Federal Reserve • Prevent Federal Reserve from giving loans to banks on the verge of failure • A similar bill is currently in the House

  16. Resources • http://www.finweb.com/banking-credit/the-federal-reserve-system.html • http://www2.fdic.gov/idasp/index.asp • http://www.frbatlanta.org/ • Associated Press

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