What is the Federal Reserve?

• The Federal Reserve (Fed) maintains the stability and growth of the U.S. economy by controlling the supply, availability, and cost of money (interest rates)
• The main way the Fed impacts the economy is through it's control of the federal fund and discount rates (the interest rates at which banks borrow money)
  
• As the Fed raises and lowers interest rates, banks pass these changes on to the consumers (you and me) who they lend money to
  
• When the fed lowers interest rates, people borrow and spend more money, stimulating the economy
  
• When the fed raises interest rates, people borrow and spend less money, slowing the economy and reducing inflation (generally)

By Joshua Walker

Video: Federal Reserve Joke