The United States Federal Reserve—one of the nation’s most important yet misunderstood institutions—works to provide security and trust in the domestic American economy and international financial markets. While attempts had been made since the 18th century to establish a central bank in the U.S., popular fear over the concentration of financial power derailed such efforts. When a series of bank panics convulsed the country in the 1890s and 1900s, New York financier J.P. Morgan led a rescue of the unstable financial system. The lack of government response boosted support for the creation of a central bank. Congress created the Federal Reserve in 1913. Today the Fed has clear mandates: to maximize employment, ensure stable prices, and keep long-term interest rates at a moderate level. Over the past 100 years—with the exceptions of the Great Depression and inflation of the 1970s—the Fed has largely achieved those goals. Criticism of the Fed often focuses on the discreet ways in which it operates and the famously opaque language of its chairmen. However, at times it has interceded in very public ways, as seen most recently in the “great recession” of 2007–2008. As the lender of last resort, it injected trillions of dollars into the economy. The results of that intervention continue to draw approval, arouse controversy, and shape discourse—public and political—across ideologies and spheres of influence.
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