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-If the Fed is concerned about inflation and wants to reduce the amount of money available, it sells government bonds to the public and to banks. The money paid immediately goes out of circulation.

-Conversely, if the Fed wants to get the economy moving again, it buys back its bonds, thus putting additional cash back into the economy.

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The Fed uses selective credit controls to set credit terms for various kinds of loans. An example of this is the margin requirement

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most frequently used to carry out monetary policy. The Fed buys and sells government bonds on the open market.

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If the Fed wants to encourage loans, it decreases the discount rate; if it wants to discourage loans, it increases the discount rate.

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Increasing the reserve requirement leads to less spending in the economy (because banks have less money to lend.) Reducing the reserve requirements increases spending and stimulates business (because banks have more money to lend).

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The $50 is shifted from Atlanta to the Chicago Federal Reserve Bank. The studio's Detroit bank gets credited, whereupon the studio’s account is credited $50. Your bank mails the canceled check back to you.

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Your bank then has $50 deducted from its deposit account at the Atlanta Federal Reserve.

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Your New Orleans bank receives the check from Atlanta and deducts the $50 from your personal account.

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The check is sent from Chicago to the Atlanta Federal Reserve Bank for collection, because you, the check writer, live in the Atlanta district.

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The Detroit bank deposits the check in its own account at the Federal Reserve Bank of Chicago.

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you live and bank in New Orleans, and you send a $50 check to the Detroit Studio, which deposits it in its Detroit bank.

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Because commercial banks are the main creators of money, much of the Fed’s management of the money supply takes the form of regulating the supply of money through commercial banks to control inflation.

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The Fed’s main job is to establish and implement monetary policy.
It aims to make certain that enough money and credit are available to allow the economy to expand, thus giving the country an ever-increasing supply of goods, services, and jobs. At the same time, it tries not to release too much money and credit into the economy because a surplus has historically produced inflation.

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the total amount of checks written but not yet cleared through the Federal Reserve.

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Not all checks are sent to the Fed for clearance, but financial institutions can use the Fed’s check-clearing service to clear checks drawn on banks outside their Federal Reserve District.
there are six steps involved in the process of clearing a check...

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Individual banks can borrow from the Federal Reserve and pay interest on the loans.

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The Fed supplies the nation’s currency and lends money to the government to finance the national deficit.

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Nationally chartered commercial banks and some state-chartered banks are members of the Federal Reserve System.

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The Federal Reserve System consists of 12 administrative areas and 12 banks. There are twelve Federal Reserve banks in the country, and each is responsible for holding reserve deposits from its member banks, as well as setting the discount rate for commercial banks in that region.

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there are seven members of this board that is appointed by the president. The overall policy of the Fed is established by them. they play a large role in controlling the money supply.

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The Fed oversees member banks and exercises regulatory power over all deposit institutions, regardless of whether they are members of the system.

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Its three major functions are regulating the U.S. money supply, supplying currency, and clearing checks.

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The Fed’s primary role is to supply us with the “right” amount of money so that we avoid both recession and inflation.

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this is the national central bank(created in 1913). its made up of a board of governors, a dozen reserve banks, and bank members.