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The Fed and How It Got That Way

Here at Centric Capital, we know that “The Fed” dominates current headlines and that this may be confusing to some people. So come with us as we delve into a small part of US history.

In 1913, after a hotly contested debate, President Woodrow Wilson signed into law The Federal Reserve Act creating the nation’s central bank. But The Federal Reserve Act wasn’t our country’s first attempt at central banking.

The First Bank of the United States was created by Congress in 1791 at the urging of then Secretary of the Treasury, Alexander Hamilton. Backlash was heavy, and once the First Bank’s twenty-year charter expired, it wasn’t renewed. The Second Bank of the United States was established a few years later but once again, its charter wasn’t renewed.

Today, the Federal Reserve has 4 main responsibilities:

  • Run monetary policy by influencing money and credit in pursuit of full employment and stable prices.
  • Oversee financial firms to ensure the safety and soundness of the banking and financial systems.
  • Maintain stability in the financial system and financial markets
  • Provide financial services to the US government, financial firms and foreign officials

Such a powerful agency could never avoid criticism, however. Criticism ranges from lack of transparency to managing a currency that is not backed by any precious metal.

If you are interested in learning more, please download our whitepaper. If you feel inclined, let’s set up a consultation and talk about how current Fed policy might affect you.