Federal reserve

Free to Choose Chapter 3: The Anatomy of Crisis

The Great Depression was not what you think it was. Most people believe it was the ultimate proof that capitalism is dangerous and unstable. That free markets, left alone, will eventually destroy themselves. Friedman says this story is almost exactly backwards. The Depression was not a failure of the free market. It was a failure of government – specifically, a small group of people at the Federal Reserve who had the power to prevent the disaster and chose not to use it.

Monetary Policy Explained: How the Fed Manages the Economy

Book: Financial Markets and Institutions, 11th Edition Author: Jeff Madura Publisher: Cengage Learning, 2015 ISBN: 978-1-133-94788-2

Chapter 4 explained how the Fed is set up and what tools it uses. Chapter 5 goes deeper into how those tools actually affect the economy. This is where it all comes together: money supply changes flow through to interest rates, which affect borrowing, which affects spending, which affects jobs and prices.

How the Federal Reserve Works: Functions and Structure

Book: Financial Markets and Institutions, 11th Edition Author: Jeff Madura Publisher: Cengage Learning, 2015 ISBN: 978-1-133-94788-2

The Federal Reserve is the most powerful financial institution in the United States. Chapter 4 explains how it is organized, how it controls the money supply, and what it did during the 2008 credit crisis. If you want to understand why interest rates change, you need to understand the Fed.