Joe Bruno wrote:

Parmenides wrote:

http://video.google.com/videoplay?docid=-5934921769808130035

I had a double major when I graduated Univ of Illinois:

1. Accounting

2. Economics/Finance


The Federal Reserve's primary function is to control the size of the
money supply in the USA. There are two reasons why this is desirable,
both of which challenge each other:

1)If the money supply is too large, we get inflation

2)If it's too small,the economic expansion necessary to create new jobs
is hindered.

As the population expands, jobs must be created for the new arrivals.

The Federal Reserve accomplishes it's function two ways:

1)changing of the interest rate it charges member banks for loans

This affects the money supply both immediately by making loans more or
less expensive to debtors and, down the road, affects the interest rate
the banks charge their loan customers.

2)Buying and selling Certificates of deposit to put more or less money
into the system. Buying creates more available funds, while selling
decreases the fund supply.

The Federal Reserve is a quasi-government agency created by Congress.
It reports to Congress periodically. I'm sure you've all Seen Alan
Greenspan, the Fed Chairman( he's close to retirement) reporting to
Congress.

Here is the section of the Constitution which gives Congress the
authority to regulate banking and money in the USA:

Section 8. The Congress shall have power to lay and collect taxes,
duties, imposts and excises, to pay the debts and provide for the
common defense and general welfare of the United States; but all
duties, imposts and excises shall be uniform throughout the United
States;

To borrow money on the credit of the United States;

NOTE THIS:To regulate commerce with foreign nations, and among the
several states, and with the Indian tribes;

To establish a uniform rule of naturalization, and uniform laws on the
subject of bankruptcies throughout the United States;

NOTE THIS:To coin money, regulate the value thereof, and of foreign
coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and
current coin of the United States;

To establish post offices and post roads;

To promote the progress of science and useful arts, by securing for
limited times to authors and inventors the exclusive right to their
respective writings and discoveries;

To constitute tribunals inferior to the Supreme Court;

To define and punish piracies and felonies committed on the high seas,
and offenses against the law of nations;

To declare war, grant letters of marque and reprisal, and make rules
concerning captures on land and water;

To raise and support armies, but no appropriation of money to that use
shall be for a longer term than two years;

To provide and maintain a navy;

To make rules for the government and regulation of the land and naval
forces;

To provide for calling forth the militia to execute the laws of the
union, suppress insurrections and repel invasions;

To provide for organizing, arming, and disciplining, the militia, and
for governing such part of them as may be employed in the service of
the United States, reserving to the states respectively, the
appointment of the officers, and the authority of training the militia
according to the discipline prescribed by Congress;

To exercise exclusive legislation in all cases whatsoever, over such
District (not exceeding ten miles square) as may, by cession of
particular states, and the acceptance of Congress, become the seat of
the government of the United States, and to exercise like authority
over all places purchased by the consent of the legislature of the
state in which the same shall be, for the erection of forts, magazines,
arsenals, dockyards, and other needful buildings;--And



This last clause, following, gives Congress the authority to create
administrative agencies to regulate certain areas. Congress does not
have the time or technical expertise to regulate the daily details of
every activity in the USA. Therefore, they create agencies like the
SEC(stock market), FCC(Communications) and FAA(aviation)
to do this for them and they periodically review the performance of
these agencies.
They created the Federal Reserve to regulate banking and the money
supply.

To make all laws which shall be necessary and proper for carrying into
execution the foregoing powers, and all other powers vested by this
Constitution in the government of the United States, or in any
department or officer thereof.