Why Is The Federal Reserve Important

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The Federal Reserve was established by Congress in 1913, and is still managed by Congress today. The Reserve makes its own independent decisions, but is required to report to Congress twice annually. The Reserve is not a political device because it is not a part of the government only accountable to Congress. The purpose of The Federal Reserve is to keep our economy healthy and their common way of doing so is through manipulating the federal funds rate. Whenever they do this the banks are directly affected and then everyday people. For example, when the reserve raises interest rates, the banks raise their rates on mortgage loans, vehicle loans, business loans and things of that nature. This affects the everyday people because most people won’t be willing or able to purchase things at these high rates, so this does not benefit most people and in turn slows down the economy from growing too fast.…show more content…
Now, everyone can’t be happy all the time, so it is the Federal Reserve’s job to make sure the majority of people are happy and not all, because our economy growing too fast is not a good thing and we need balance or we suffer big inflation issues. So, high and low interests may not be ideal to everyone all the time but it is necessary to keep a steady growing economy and not a super booming economy, because eventually in the second case, no one is happy because things get too unpredictable and out of control for everyone. With all that being said, the interest rates should defiantly be determined by the Federal Reserve and not the market, because we need balance and the market cannot balance on its own and it would simply crash after having a good

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