How does the Federal Reserves System affect our country?

The Federal Reserve System, also called the Fed is the
body that has the responsibility of overlooking the banking system of the country. It in
a sense influences every aspect of our economy and therefore our
country.

The Fed frames rules and regulations to help
maintain the financial stability of all the banks. It controls the money supply in the
country by controlling the interest rates, and liquidity. An increase in the interest
rates by the Fed results in an increase in savings on the one hand and people having to
pay more for their loans and mortgages on the other. It also reduces the amount of money
being invested in the creation of new industries as business owners find it costlier to
borrow money. A reduction in the interest rates has an opposite
effect.

The Fed supplies the government with funds by
selling government bonds. The increase or decrease in inflation is controlled by the Fed
by increasing or decreasing the liquidity in the
economy.

Therefore as the economy is an integral part of
our country, all the actions by the Fed that affect the economy ultimately affect our
country.