We hear about “the Fed” or the Federal Reserve doing various things in the news, but what exactly is the Fed?
How can one institution be responsible for rising and falling interest rates, and why does the stock market bounce around every time the Federal Reserve Chairman speaks?
Understanding the Federal Reserve System
How can you understand a quasi-Federal agency that is still independent, has mysterious meetings that impact the nation’s economy, and can cause the stock market to go wild?
Here are some key areas to understanding what the Federal Reserve is, what it does, and the tools it uses to achieve its goals.
What is a Central Bank?
The Federal Reserve is the United States’ Central Bank. A central bank is a quasi-government institution that manages its country’s money supply and interest rates. Most central banks also are in charge of regulating the banking environment of the country.
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