THE FEDERAL RESERVE SYSTEM
The Fed is the gatekeeper of the U.S. economy. It is the bank of the U.S. government and, as such, it regulates the nation’s financial institutions. The Fed watches over the world’s largest economy and is, therefore, one of the most powerful organizations on earth. (Investopedia. com)
As an investor, it is essential to acquire a basic knowledge of the Federal Reserve System. The Fed dictates economic and monetary policies that have profound impacts on individuals in the U.S. and around the world.
FIGURE 5.14 GDP ®esponse per Currency Pair
Source: NewsTrader Pro | Wincorp Consulting Company | www.newstraderpro.com
FIGURE 5.15 GDP (Preliminary) Average ®esponse for EU®/USD
Source: NewsTrader Pro | Wincorp Consulting Company | www.newstraderpro.com
The Fed’s Mission
The Federal Reserve System is the central bank of the United States. It was created back in 1913 to provide the nation with a more stable monetary economy. Before the establishment of the Fed, Americans faced a brutal boom-and-bust financial system.
Today, the Federal Reserve’s duties fall into three general areas:
1. Influencing the monetary and credit conditions to establish a healthy economy. Such actions reduce systemic risk of the previous boom-and-bust cycles.
2. Regulating ...
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