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| − | 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. | + | 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. |
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| − | Today, the Federal Reserve’s duties fall into four general areas: | + | Today, the Federal Reserve's duties fall into four general areas: |
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| | *conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates | | *conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates |
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| | *maintaining the stability of the financial system and containing systemic risk that may arise in financial markets | | *maintaining the stability of the financial system and containing systemic risk that may arise in financial markets |
| | *providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system <ref>[http://www.federalreserve.gov/generalinfo/mission/default.htm Federal Reserve System] </ref> | | *providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system <ref>[http://www.federalreserve.gov/generalinfo/mission/default.htm Federal Reserve System] </ref> |
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| | + | Like most government institutions, the Federal Reserve System has given unfair preferences to favored individuals. For example, "[i]n September 1998 the Federal Reserve organized a rescue of Long-Term Capital Management, a very large and prominent hedge fund on the brink of failure."<ref>http://www.cato.org/pubs/briefs/bp-052es.html</ref> Supposedly "[t]he Fed intervened because it was concerned about possible dire consequences for world financial markets if it allowed the hedge fund to fail," but this stated reason has been disputed.<ref>''Ibid.''</ref> The more obvious reason for this favoritism was to protect privileged individuals from failure. |
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| | ==References== | | ==References== |