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Organization of The Federal Reserve

Organization of The Federal Reserve. Mr. Mizak Economics. "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -Henry Ford. The Federal Reserve System.

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Organization of The Federal Reserve

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  1. Organization of The Federal Reserve Mr. Mizak Economics

  2. "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -Henry Ford

  3. The Federal Reserve System • Created in 1913 under the “Federal Reserve Act of 1913” • President Woodrow Wilson • Created to prevent financial panics that had occurred during the 1800s and early 1900s • Why was a central banking organization needed?

  4. Purpose of The Federal Reserve • Primary function of the Fed is to control monetary policy • Monetary policy: controlling the rate of growth of the supply of money in circulation in order to affect business activity in the economy

  5. Structure of the Fed Board of Governors • Direct operations of the Fed • Supervises district banks and regulates activities of member banks • 7 full time members • President chooses one member as a chairperson • Appointed by the President  approval of the Senate • Term = 14 years • Free from congressional approval of their actions

  6. Federal Advisory Council (FAC) • 12 members elected by directors at Fed Reserve district bank • Aids the Board of Governors • Report to the Board of Governors on current economic conditions in the nation

  7. Federal Open Market Committee (FOMC) • 12 members (Board of Governors, head of NY Fed Bank, 4 rotating heads of other Fed District Banks) • Decide what actions should be taken by the Fed • Raise/lower interest rates • Change reserve requirements, etc.

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