Do YOU know how the Federal Reserve System works?

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Monday December 12, 2005 · 4:38 PM PST

2005/12/12 · 16:38

With a flick of the wrist, the Federal Reserve Board affects our national economy.

Some would argue the Fed is a principal player in the global economy.

But, how many understand what goes on inside the Fed?

Do they use crystal balls? Magic wands? Post-its?

How do they keep the economy humming?

Or, do they?

Some quotes from How the Fed Works

"The power of the Fed represents the sum of conscious and not-so-conscious choices that the government and society have made about who's going to be in the driver's seat of economic policy, and over time, things have evolved such that the Fed has taken over the driver's seat," says Tom Schlesinger, executive director of the Financial Markets Center.

How do you make a "not-so-conscious" choice? Isn't that more accurately described as "no choice?"

"Their ability to influence credit market conditions and the supply of money has enormous influence on the overall direction of the economy, over who gets a job or a pink slip and over who has success in their business or is looking at bankruptcy."

Hey, wait a minute! The FED decides who has success in their business and who is looking at bankruptcy?!

I thought the MARKET decided?!!

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