The Federal Reserve

The Federal Reserve is the central bank of the U.S.A. However, it is not part of the U.S. government. In the early nineteen hundreds, the Morgans, the Rockefellers and the president (Woodrow Wilson) all heavily supported the creation of the Central Bank. In 1910 the Morgans, Rockefellers and Sen. Aldrich met on Jekyll Island and created the Federal Reserve Act. This act was passed by Congress and signed by the president three years later. In 1914 the Fed began official operations.

President Woodrow Wilson Signing Fed. Reserve Act

The functions of the Fed include the clearance of checks, issuing of new currency, examining and regulating financial institutions, and collecting data for economic research and analysis. The Fed is also the lender of last resort, a bank for the government and the controller of the money supply.

The latter is the biggest and most important function of the Federal Reserve. By controlling the money supply, the Fed can raise or lower the interest rates. More money in the market creates lower interest rates and higher inflation.

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