Essay about Complexity: Federal Reserve System and u . s. Financial Markets

Submitted By Sydneydoyal
Words: 591
Pages: 3

Complexities of the US Financial System

The U.S. financial markets impact the economy, businesses, and individuals in a multitude of ways. Businesses are impacted by the U.S. Financial markets through investing. For instance, if the number of investors lowers dramatically businesses will have a hard time finding funds to grow their business or even start it up at all. Individuals who invest or trade are both positively and negatively impacted. According to Kimberly Amandeo, " The investors profit when the companies increase their earnings, which keeps the U.S. economy growing. Its easy to buy stocks, but takes alot of knowledge to buy stocks in the right company". If not done properly or funds are not pulled before a business fails, the individual- who may have their livelyhood riding on this- could lose everything. The investor is needed in order to keep businesses going. If individuals just decided to stop investing businesses would fail and the U.S. would fall into even more debt. The U.S. Financial market acts as a chain that connects the economy, businesses, and individual together and shows us just how well the economy is doing. If one is effected, both negatively or positively, so are the other two. Due to the constant development of different theories, expectations, and predictions, it is nearly impossible to predict whether the financial market will go up or down.

The U.S. Federal Reserve is the central bank of the United States. As stated by the Board of Governors of the Federal Reserve, "It was created by the congress to provide the nation with a safer, more flexible, and more stable monetary and financial system". The Federal Reserve Chairman is the head of the central banking system, he/she is nominated by the President and obligated to serve a four year term, in which he/she serves as a spokesperson and representative of the Board. The Board of Governors are also selected by the president and serve a lengthy term of 14 years. According to Alex J. Pollock, "Neither the Federal Reserve nor any regulator nor any government is in a godlike position above the system of financial interactions, looking down and able yo understand and decree from on high. Rather, they are all enmeshed within the system of recursive interactions. THIS MEANS THERE WILL ALWAYS BE MISTAKES". The effectiveness of the Federal Reserve in today's economic environment…