The Federal Reserve Unveiled: How Does It Manipulate the U.S. Economy? Insider Information You Must Know! 🔥
1. The Federal Reserve is the central bank of the United States, controlling monetary and interest rate policies to ensure economic stability in the U.S.
2. The Federal Reserve was not established from the beginning; it was founded in 1913. Initially, Americans were distrustful of centralized power.
3. Before the Federal Reserve, the U.S. had temporary banks responsible for fundraising, but they only lasted a few decades.
4. Once, private banks could "print money" as long as they had gold, silver, or government bonds as collateral. Similar to today's USDT and USDC.
5. Throughout U.S. history, there have been multiple bank runs, leading people to realize that a central bank was necessary to stabilize the financial system.
6. The monetary policy of the Federal Reserve is determined by the Federal Open Market Committee (FOMC), which meets eight times a year to set interest rates.
7. The FOMC consists of 12 members, including 7 governors and 5 regional Federal Reserve Bank presidents.
8. Governors are appointed by the president, with a 4-year term for the chair and 12-year terms for the other members, and the New York Fed president occupies one seat.
9. The two main goals of the Federal Reserve are to stabilize prices and achieve full employment, with price stability generally regarded as more important.
10. The independence of the Federal Reserve: once appointed, members can only be removed by a 2/3 vote in Congress.
11. Although there are private bank shareholders behind the Federal Reserve, their shares are minimal, similar to a membership system, allowing them to receive some dividends each year.
12. Each year, most of the Federal Reserve's profits are transferred to the U.S. Treasury, averaging $90 billion.
13. In 1879, the Federal Reserve chair raised interest rates by 20%, successfully curbing inflation and bringing 20 years of prosperity to the U.S. economy.
14. Interest rate hikes and cuts refer to the short-term borrowing rates between banks, affecting market liquidity.
15. During the 2008 financial crisis, the Federal Reserve implemented quantitative easing, rapidly purchasing bonds, leading to a market rebound.
16. When the economy is struggling, financial institutions are more willing to invest in the stock market, and companies also choose to repurchase shares, resulting in a prolonged bull market in the U.S.
👉 With this explanation, isn't the operation of the Federal Reserve clear now?
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