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In order to control and manage the money supply in the United States and avert economic disasters, the U.S. government established the Federal Reserve, the country's central bank.
How the Federal Reserve Controls the Supply of Money ?
Free-market civilizations have had boom-and-bust cycles throughout history. While everyone likes prosperous economic times, recessions are frequently distressing. The Federal Reserve was established to control the nation's money supply and shield American residents from economic harm in the united states. The Fed has strong instruments at its disposal to influence the money supply. The Fed was given the authority to serve as the lender of last resort as one means of protecting against financial panics and is primarily responsible. That is, the Fed would give money to the banks, encouraging them to lend more when hazardous business prospects made commercial banks unwilling to offer new loans.
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