The Federal Reserve Act

The Federal Reserve Act is one of the significant policy changes in the international finance that have had both serious negative and positive impacts of the people of America and the world as a whole. President Woodrow Wilson signed the Act into law in December 1913. Today the Federal Reserve is widely viewed as one of the most significant financial institutions around the globe. The economy of the US was considerably less stable before the Federal Reserve was introduced than it is now. Seasonal crunches in cash, high bank failure rates, and panics made the economy of the US an unsafe place for both domestic and international investors to put their capital.
Years after the introduction of the Federal Reserve, the US went through the 1929 credit crash and the Great Depression. People blamed the Fed for restricting cash flow at a wrong time hence starving out many businesses, and people who might have had a chance at survival. However, during the 1987 crash, the Federal Reserve was seen to function just like its creators had envisioned during its creation. The Federal Reserve, created by the Federal Reserve Act, gave businesses credit at low-interest rates which enabled them to survive through the crisis.
In the view of this article’s author, the Federal Reserve Act was a good policy change. It has proven to be a great tool to keep the economy afloat. The decades it has existed have revealed that monetary policies based on systematic rules work better with it than the discretionary policies that are often unpredictable.

The great depression and the high inflation, unemployment, recessions, and slow economic growth that were experienced between the mid-1960s and the 1970s were associated with discretionary financial policies by the Fed. The systematic policies of the 1980s and 1990s, on the other hand, helped steer the nation to a more robust economic growth with lower unemployment, longer expansions, and lower lending rates. Therefore, the relevant bodies should find a way of getting rid of the less beneficial discretionary policies and coming up with more systematic policies to replace them.