Title: Complexities of the U.S Financial System
Students Name: Shellie Richardson
Professor’s Name: Karin Torres, MBA
Course Title: Principles Of Finance
Date: July 28, 2013
The United States financial (wealth) system is largely considered to be the most recognized system in the world. Financial markets are designed to skillfully direct the movement of money and savings and investments in the economy. By doing this the United States financial system stimulates the growth and the production of money, goods and services. The combination of an established and secure financial markets and institutions systems, in addition to a varied collection of financial goods and services , will ...view middle of the document...
The Federal Reserve must maximize employment, stabilize prices and facilitate long term interest rates. Maximizing employment and stabilizing prices two of the objectives of the Federal Reserve Act are sometimes referred to as the Federal Reserve's dual mandate. The Federal Reserve’s roles and responsibilities have developed over the years to meet a growing demand; these responsibilities include supervising and regulating banking institutions, maintaining the stability of the financial system, conducting the nation's monetary policy, and providing financial services to depository institutions, the U.S. government, and foreign official institutions. This is huge task and requires a very detailed oriented mind with some sense of financial management oversight.
The Board of Governors supervises The Federal Reserve System which is located in Washington, D.C. The Board of Governors is a federal government agency which consists of seven members appointed by the President of the United States and confirmed by the U.S. Senate. The board serves 14 year terms and consists of 1850 employees. The Board plays a major role in the daily operations and decision making of the Federal Open Market Committee (FOMC), the Board of Governors has the authority to set a reserve requirement from 8 percent to 14 percent on all transactional deposits as well as, approving the discount rates as they see the fluctuation on the market. The United States buying power is one of the major ways that we can affect the entire economic flow of the world. Since the United States dollar (USD) is used to facilitate most, not all international business transactions, one would conclude that anything that happens with the United States economy will have an effect on international finance in a significant way. Additionally, with gas and food prices on the rise and the dollar decreasing in its value, people are only spending on the monthly essentials and spending less on their wants. This scenario is especially true of my family. We are now operating off of one income and we have all had to make financial sacrifices to keep our head above water.
The Federal Reserve Board has the ability to change the interest rates at which banks borrow and lend money, this has a tremendous impact across the entire economy, including...