Federal Reserve System control the nation’s money supply

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Control of the nation’s Money supply by the Federal Reserve System
The Federal Reserve System has long been able to control the supply of money in the economy through the use of the monetary policy tools. The federal was responsible for the issuing of the new currencies and taking away the worn-out ones in case the need arises (Board of Governors – Federal Reserve System). Following the recent research, the Federal has completely failed to control the nation’s money supply. According to the monetary policy system, when money supply increases in the economy, the central government has the ability to adjust the interest rates so that it does not result in inflation. This was due to the fact that the federal would lend more money to the commercial banks. So, with this act, all commercial banks are induced to lend more money to individuals hence increasing money in the hands of the people who are in charge of the economy/ country (Board of Governors of the Federal Reserve System).
Therefore, from the monetary theory, the interest rates reduction encourages the commercial banks to increase on the money available for lending. This implies that the Federal has partially failed to control the circulation of the currency (money) lent to individuals (Board of Governors-Federal Reserve System). Hence it has ended up in the failure of controlling the inflation and allowing the PP (purchasing power) of individuals to fall dramatically.

Similarly, the federal should not control the nation’s circulation of money because it has small impact on the performance of the economy as it is the case with the tools of monetary policy. (Board of Governors-Federal Reserve System). For example, the United States had the best and greatest period of the economy before its establishment. The US economy reported a growth of 6.80% of their GDP in the period of 1873 (Board of Governors of the Federal Reserve System).
Conclusion
Conclusively, the “Federal Reserve System” is not a good basis for reliability as a money supply controls system in the country (economy). However, the country can as well use other systems because of the ineffectiveness in the federal activities. Other measures can be put in place in case the Federal Reserve fails to perform its duties expectedly.
Works cited
Board of Governors of the Federal Reserve System. Monetary Policy Report. Washington, DC, February 14, 2017, www.federalreserve.gov/monetarypolicy/mpr_20170214_part2.htm. Accessed 05 Oct. 2018
Board of Governors of the Federal Reserve System. Money Stock and Debt Measures – H.6 Release. Washington, DC, October 5, 2018, www.federalreserve.gov/releases/h6/current/default.htm. Accessed. Accessed 05 Oct. 2018