The Power Of The Federal Reserve

The Federal Reserve influence on interest rates and the economy is great

. It is often said that the chairman of the Federal Reserve Board is the second most powerful person in the United States. Only the president who is the commander in chief of our armed forces is more powerful. Where does all this power come from? The Federal Reserve can create or destroy the best forex trading markets.

The power of the Fed comes from its role as the nation's central bank and its responsibilities and powers to conduct monetary policy. The Fed's monetary policy actions have a direct effect on the level of interest rates, the availability of credit and the supply of money all of which have a direct impact on financial markets and institutions and more importantly on the level of economic activity and the rate of inflation in the economy.

To make the story even more interesting all of this awesome power, the Fed is privately owned by the banks that are members of the Federal Reserve System. As a result the Fed is not a government agency and is remarkably free from presidential and congressional pressure. There are a lot of important issues and consequences that the Fed can both set and call us.

There was once a time when there was no such thing as the Fed. Back then money was applied to the gold standard. Basically what this meant is that every dollar could be redeemed for the gold that was backing it. That was done away with and we have the Fiat system that we have today. Basically money can just be printed on a whim. Also now with the Fed interest rate can be set on a whim and forex trading tips in favor to those countries with the most favorable interest rates. this makes the Fed one of the most powerful institutions.

by: Rhab Hendrik

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