Central Bank?


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What the **** is the point of it? The Fed doesn't contain inflation and never has, why do we have a Central Bank? Woodrow Wilson regretted it after he brought it back...what is its purpose and why do we put up with it?


Banks in Central Point, OR



Answer (3):

angelwith4faces

All modern governments have central banks, or they are ruled by one. The alternative is an anarchy of currencies which is not good for simple trade. That is why the Europeans, among other reasons, want to unionize, and why many countries peg to the dollar or other currencies.

The US Central Bank is different only on paper, to get around the bizarre limitations of the US constitution, which does not mention central banks, fractional reserve banking or printing dollars (it does mention coin, but that is another matter).

The 'Federal Reserve System' as it is called has, at various times, allowed some inflation, but mostly inflation has been under control since it began. Some amount of inflation is probably a good thing since it prevents hoarding.

JTorres

To angel wit,

You could not be more WRONG.

Inflation is a MAJOR problem! It destroys the value of a dollar by increasing the money supply so it flows to people's pockets. As a result of that, if inflation does not keep up with production there's too much money out there chasing too few goods. So in return business RAISES prices to keep their businesses going.

Another thing it does is decrease interest rates since people have more money and won't demand as much.

And something that was cheaper before inflation, now is more expensive. When you spend all your money guess what? THE PRICE STAYS EXPENSIVE because when you collect your next check, it's worth less in value because of the recent inflation. (provided inflation kept up with wages)

Ghiacy

The main thing that CB follows is to keep the sustainability of the price.
but does economic growth, interest rate and is the controler of the banks,,,

it is to control the inflation and deflation,, and so on