Federal Reserve

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Federal Reserve: A group of economic policymakers and forecasters (people who say what might happen in the future), the Federal Reserve Board sets an interest rate related to economic conditions. The Fed, as the Federal Reserve is often called, sets interest rates which form part of monetary policy.

When the Federal Funds rate is increased, the Fed makes borrowing more expensive, which means people and companies spend less and discourages inflation. When economic growth slows, the Fed decreases the Fed Funds rate so that borrowing will increase and there will be growth.

The Fed pays no federal (national) or state taxes, which makes it unique among private corporations.

Thomas Jefferson, a "founding father" of the United States of America, once said "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around the banks, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."