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Federal Reserve

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In America today, many people have heard of the Federal Reserve, yet a portion of Americans do not know the history, the structure or the entire function of the central bank. The Federal Reserve’s purpose was to provide the nation with a safe, more flexible and more stable monetary financial system. Whether or not the Federal Reserve today has provided that, or if it is needed, is still being debated today. Though good or bad, the Federal Reserve plays a tremendous role in our economy. This essay reviews the history, structure, and function of the Federal Reserve as well as discusses some pros and cons to this central banking system we have today. The Federal Reserve today is not the first U.S. central bank. Congress had made two attempts at central banking that were ultimately unsuccessful. The first attempt was established in 1791 with the mandate to manage the government's money and to regulate the nation's credit {CITE}. This bank was mainly controlled by private investors while a smaller portion was maintained by the Federal government. This bank failed due to the citizen’s fear of the size of the bank and believed it to be dominated by private interests. After the first central bank closed came four years of bank runs and economic instability. Congress, convinced that another central bank will fix these problems, established another central bank in 1816. Though like the first bank, the Second Bank of the United States was primarily controlled by private investors. The bank’s charter expired and the central bank ceased to be. Once more America was plagued by private currencies, financial instability and bank panics by the commercial banks that held too much power. Then following a severe bank panic in 1907, Congress create... ... middle of paper ... ... Another con is that Federal Reserve can often put private interests above public interests. Lobby groups and private interest groups can have a huge influence over the Federal Reserve, permitting individuals to benefit over the whole citizens. Also the Federal Reserve is run by a people who think more for businesses than for than the regular American citizens, this can leave the Federal Reserve open for internal corruption that leads to choices that benefit private interests rather than public interests.
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