The Federal Reserve Building
The Federal Reserve of The United States is one of the world’s most influential organizations. The Fed’s decisions affect the entire world because of the sheer size of the U.S. market and wide spread usage of its currency. Recently the Fed ended its asset-purchase program that began in response to the recession of 2008.
Janet Yellen, Chairperson of the Federal Reserve
The goal of the program is to increase the cash in the U.S. to stimulate growth by making it easier for banks to lend out money. This it to allow businesses to expand, to hire more people, to increase employment, to increase consumer income, to increase consumer spending, to increase national GDP. It is very interesting to see how such decisions can cause a chain reaction. It is very apparent the necessity of going down so many levels in order to cause any sort of change.
The Fed has ended this “quantitative easing” program partly due to improving employment numbers, as written in a recent Bloomberg article. More employment was the goal of this initiative, and now that it is working and approaching stable growth, the Fed can focus on other areas such as inflation rates.
The Fed was created to bring stability to the capital U.S. market. Asset purchasing is one of the many tools it has for doing this.
Bloomberg Article: http://www.bloomberg.com/news/2014-10-29/fed-ends-qe-while-keeping-considerable-time-low-rate-pledge.html
Information on Fed’s Operations: http://www.investopedia.com/articles/economics/08/monetary-policy-recession.asp
Causes of the Recession for background reading: http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article
Images:
Janet Yellen: http://i.huffpost.com/gen/1569298/thumbs/o-JANET-YELLEN-facebook.jpg
Federal Reserve Building: http://upload.wikimedia.org/wikipedia/commons/8/8d/Marriner_S._Eccles_Federal_Reserve_Board_Building.jpg