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The Fed is best know for its handling of monetary policy, which consists of influencing money and credit conditions in the economy in order to help the U.S. economy experience strong growth in output and income, high employment, and stable prices.
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Friday Funnies: The Story of the Federal Reserve System Part 2

George 1 Comment

Last weeks Friday Funnies covered what the Federal Reserve doesn’t do. This week’s comic looks at some of the key functions that the Fed performs. 

but it does perform a variety of tasks to help the U.S. economy function smoothly and meet the nation's economic goals.
…but it does perform a variety of tasks to help the U.S. economy function smoothly and meet the nation’s economic goals.

So the Fed’s main task is to keep the U.S. economy functioning smoothly, but how exactly does the Fed do this?

The Fed is best know for its handling of monetary policy, which consists of influencing money and credit conditions in the economy in order to help the U.S. economy experience strong growth in output and income, high employment, and stable prices.
The Fed is best know for its handling of monetary policy, which consists of influencing money and credit conditions in the economy in order to help the U.S. economy experience strong growth in output and income, high employment, and stable prices.

They probably should have also shown a graph of the target federal funds rate set by the Federal Open Market Committee (FOMC). It’s the number that the news media often latches on to.

The term MONEY refers to cash in circulation and the amounts that people and business have in bank accounts and CREDIT means the amounts that banks and other lenders can lend.
The term MONEY refers to cash in circulation and the amounts that people and business have in bank accounts and CREDIT means the amounts that banks and other lenders can lend.

Next week we’ll discuss the balancing act that the Fed performs between money and credit to keep the economy stable.

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So to try to prevent both recess and inflation, the Fed has three main monetary policy tools: open market operations, reserve requirements, and the discount rate.

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George 0
I got a 3% raise, but prices are up 8%, so I'm worse off now than I was before. I guess I'll have to eat out less often or cut back on how much clothing I buy.

The Story of the Federal Reserve System Part 4: Inflation

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