The Fed in Five | A History of the Federal Reserve - YouTube

Money you put it in the bank  and it's there when you want it  

but what if you went to the atm and the bank  didn't have your cash it happened in the past  

and that's why the federal reserve was created  to keep the financial system stable the fed  

provides short-term loans to banks so they have  enough money on hand in times of financial stress

but travel back in time to before 1913 no one  was responsible for the health of our banking  

system there was no lender of last resort why  because from our country's earliest history  

some people opposed a central bank they feared  it would put too much power in too few hands  

but as the country grew frequent banking  panics kept the economy on a roller coaster  

ride complete with ups and downs chills and spills  the last straw came in 1907 one of wall street's  

largest financial institutions the knickerbocker  trust company went bankrupt panic was widespread  

people raced to withdraw their savings only  to find that banks didn't have cash available

financier jp morgan and a group of investors  rescued the economy with emergency loans to banks  

but it was clear that relying on wealthy  individuals wasn't the right long-term  

solution for the nation it was time for a  change the united states needed a strong central  

bank that would keep money flowing during  times of crisis and help prevent bank runs  

to keep power from being concentrated  in washington or wall street  

lawmakers spread control across the country  the federal reserve act of 1913 established 12  

independent reserve banks in addition to a board  of governors in washington the structure would  

insulate the fed from partisan politics and  powerful financial interests over time the  

fed learned how the supply of money and credit  affects financial markets and the economy by  

the 1950s the fed was working to counter the ups  and downs of booms and busts and limit inflation

in the late 70s a new crisis hit bad news  on the inflation front wholesale prices were  

up again in february high unemployment with  high inflation challenged america and the fed  

oil price hikes and poor policy  choices made the situation worse  

in 1979 paul volcker was appointed fed chairman  volcker and the federal open market committee put  

the brakes on inflation they reduced the growth  of the money supply and raised interest rates  

once inflation was back in check the economy  started growing again and unemployment fell

breaking news here stocks all around the  world are tanking more than half a million  

americans lost their jobs last month that is  the worst month for job losses more recently  

in 2008 the fed responded to the largest  financial crisis since the great depression  

many major financial institutions were on the  verge of collapse unemployment skyrocketed  

the federal reserve is more than happy to try  the fed made emergency loans to stabilize the  

financial system and then purchase bonds to lower  interest rates and help stimulate the economy

though the fed wasn't able to prevent  what has been called the great recession  

its actions helped keep the  situation from being much worse

beyond financial crises there will always  be unforeseen events and natural disasters  

the fed can do a lot to cushion their  economic impact and keep money flowing

so the next time you reach into your wallet or  drop by an atm take a look at one of the bills and  

find the words federal reserve note and remember  the fed's goal is to help keep the economy healthy