ECON230 Regent University Federal Reserve System Discussion Two (2) response posts ranging from 125-200 words Posts to respond too are attached below Thi

ECON230 Regent University Federal Reserve System Discussion Two (2) response posts ranging from 125-200 words

Posts to respond too are attached below

This weeks study ———–

The Federal Reserve system was started in 1913, the same year as the federal income tax was started. Compare the economic performance for the U.S. before and after 1913. You may use any method of comparison you think appropriate just be consistent.

Read: Cowen and Tabarrock Chapters 32, 33

Modern Principles of Economics 4TH 18

Author:

Cowen, Tyler / Tabarrok, Alex

ISBN-13:

978-1-319-09872-8

ISBN-10:

1-319-09872-X

Edition/Copyright:

4TH 18

Publisher:

Worth Publishers, Inc. Post #1 – William Gott
Before the Federal Reserve was a thing, America was plagued with financial crises.
The failure of one bank often had a domino effect, in which customers of other banks rushed
to withdraw funds from their own banks even if those banks were not in danger of failing.
Banks needed a source of emergency reserves to prevent the panics and resulting runs from
driving them out of business. This is what helped lead to the Federal Reserve Act of 1913.
The Federal Reserve System is the central bank of the United States. “It was founded
by Congress in 1913 to provide the nation with a safer, more flexible, and more stable
monetary and financial system. Over the years, its role in banking and the economy has
expanded” (Federalreserve.org 2004). Before this central bank was created, a lot of the
financial panic was due to local banks having a lack of currency. This is where the central
bank or “fed bank” can step in.
And as I mentioned earlier, before this system was in place, a lack of available
currency had caused the earlier banking panics. “Regionally, the central bank would have to
respond to the local needs for currency, which could vary across regions” (St. Louis Fed.org
2007).
Having this special allotment of currency in a central location helped put not only the
banks at ease, but the public as well. So, in my opinion, I feel like the economy after the
Federal Reserve is much more stable. This is due to the availability of help from the
government, which greatly slowed down panic situations, which in the past had caused
financial crises.
References
(2004, September 2). Retrieved November 27, 2019, from
https://www.federalreserveeducation.org/about-the-fed/structure-and-functions.
The History and Responsibilities of the Fed: In Plain English: St. Louis Fed. (2007, April
12). Retrieved November 27, 2019, from https://www.stlouisfed.org/in-plainenglish/history-and-responsibilities-of-the-fed.
Post #2 – Ariel Middleton
According to the Encyclopedia the Federal Reserve system was started in 1913, the same
year as the federal income tax was started. In comparing the economic performance for the
U.S. before and after 1913 there were both pros and cons. The System itself “was created by
the Federal Reserve Act, which President Woodrow Wilson signed into law on December 23,
1913. It consists of the Board of Governors of the Federal Reserve System, the 12 Federal
Reserve banks, the Federal Open Market Committee, and the Consumer Financial
Protection Bureau.” (Federal Reserve System,2019,Britannica’s On line)
The pros of the economic performance before 1913 are that it establishing a currency, the
financial system was accurate,systemic risks were in the financial system of the United
States. It also increased what was going to happen monetarily because they had a plan set in
place. What is interesting is that “operations undertaken by the New York Fed on behalf of
the Federal Reserve System were therefore allocated among Reserve Banks. The formula
used for this purpose was originally intended to ensure that all Reserve Banks had sufficient
holdings of interest-bearing government securities and adequate earnings.” If I understand
this concept correctly this was in place to make sure the financial system was stable from
their point of view. From these pros there are also several cons that are presented.
Cons include the system continually keeping the government in a form of debt, there is a
difference in private versus public interest, and rule-making policy. “Between the desire,
often on different grounds in diverse quarters, for rule-based policymaking, and the
practicalities that, inevitably or not, lead central bankers to preserve an essential role for
discretion in actual policy decisions.”(Friedman,2012) It would seem that a government
implemented policy would be one that keeps the people in mind. Fortunately, as we look in
the scripture we are encouraged that God always keeps His children in mind. Isaiah 9 says
“And the government shall be upon His shoulder,and His name shall be called Wonderful
Counselor, Mighty God,Everlasting Father, Prince of Peace. There shall be no end to the
increase of His government and of peace,[He shall rule] on the throne of David and over his
kingdom,To establish it and to uphold it with justice and righteousness from that time
forward and forevermore.The zeal of the Lord of hosts will accomplish this.” (The Holy
Bible, AMP)
Blessings,
Ariel
References
Carlson, M., & Wheelock, D. C. (2016). Interbank markets and banking crises: New evidence
on the establishment and impact of the federal reserve. The American Economic Review,
106(5), 533-537. doi:10.1257/aer.p20161044
Federal Reserve System. (2019). In Encyclopædia Britannica. Retrieved from
https://academic-eb-com.ezproxy.regent.edu/levels/collegiate/article/Federal-ReserveSystem/33898
Friedman, B. M. (2012). Rules versus discretion at the federal reserve system: On to the
second century. Journal of Macroeconomics, 34(3), 608-615.
doi:10.1016/j.jmacro.2012.05.009
The Holy Bible, AMP

Purchase answer to see full
attachment