The Federal Reserve came from humble beginnings. In the 1800's "bank runs" were normal. In times of financial panic, concerned consumers would withdrawal all of their money. This mass runs would caused a shortage in currency. People were unable to withdrawal money and many banks went under when they ran out of money. Following years of economic instability the Federal Reserve Act of 1913 was passed by Congress. The Federal Reserve was charged with control and regulation of the financial industry and monetary policy. The Fed would loan money to member (charter) banks to make sure there was enough money available in the economy. Each member bank was also regulated by the Fed and required to hold a deposit with one of 12 Federal Reserve Banks. (Timberlake). The Federal Reserve was a lender of last resort for member banks and the Federal government. The intention was to alleviate fears and to stabilize the economy. The Federal Reserve also monitored the transition from the gold standard to a paper currency. It was necessary for the transition to be...
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Cargill, Thomas F., and Gerald P. O'Driscoll Jr. "Federal Reserve Independence: Reality or Myth" Cato Journal 33.3 (2013): 417-35. ProQuest. Web. 23 Feb. 2014.
Kohn, Donald. "Federal Reserve Independence in the Aftermath of the Financial Crisis: Should we be Worried?" Business Economics 48.2 (2013): 104-7. ProQuest. Web. 23 Feb. 2014.
Meltzer, Allan H. "Learning about Policy from Federal Reserve History." Cato Journal 30.2 (2010): 279-309. ProQuest. Web. 23 Feb. 2014.
Meltzer, Allan H. "Origins of the Great Inflation." Federal Reserve Bank of St. Louis Review (2005): 145-75. Web. 14 Feb. 2014.
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