This Day in History- The Federal Reserve Act

Woodrow Wilson must have had the phrase “money makes the world go around” in mind when he signed the Federal Reserve Act on December 23^rd, 1913. This act created the Federal Reserve with twelve private regional banks, and gave the system the ability to issue Federal Reserve notes. The implementation of this act allowed the United States dollar to go international, as well as allowed the government to regulate inflation of the dollar. Since this act was signed, the responsibilities of the Federal Reserve have been expanded broadly to impact nearly every economic institution within the United States and other foreign institutions.

The Federal Reserve has three main objectives it is supposed to pursue: maximum employment, stable prices, and moderate long-term interest rates. These objectives are often referred to as the dual mandate, and together they are supposed to ensure the economic stability of the country as a whole. Whether the Federal Reserve has been effective in its execution of the mandates is often disputed, however.

Since the creation of the Federal Reserve, there has been an abundance of criticism and controversy about the system. In order to sort out what would be best for the nation and the people, we must continue to analyze and modify our economic and governmental systems. It is likely that aspects of the Federal Reserve will be adapted or outright changed in time, and in another 100 years we may see different economic policies in place.