The central bank of America, is known as the Federal Reserve (Fed), which specifically is tasked with the agenda to maximize employment as well as to keep prices stable so as to minimize monetary inflation. While those two goals are of significant importance in and of themselves, we do so find that the Fed, because of its immense monetary power, is an institution in which some entities are going to be far more benefited than others through its policies. For instance, the Fed essentially sets the interest rate policy for the United States, which means, in effect, the lending rate or the cost of money, for those so borrowing such; in which, in short, when interest rates are low or trending lower, this encourages business investment as well as business expansion, whereas when interest rates are high or are being raised, this serves to put a damper on business expansion and typically forces corporations to tighten their belts, because the cost of money and its overall availability serves to make a material difference to the bottom line for business enterprises.
Another of the functions that the Fed involves itself in, is the supply of money within the economy, and thereby the velocity of such; in which, basically the less supply of such money and the slower the turnover of such, the more this has a strong tendency to reduce business activity – as compared to when the supply of money is robust and turnover is thus quicker, which thereby encourages businesses to expand. So too, the Fed is seen as a lender of last resort, so setup in particular to seemingly benefit those that are its most favored institutions, though this is done ostensibly for the stability of the nation, and thereby a way for those businesses that have found themselves somehow to be in a rather precarious financial condition, to be provided with a helping financial hand in order to right their fiscal ship. Additionally, the Fed will also buy up certain company’s corporate bonds, which obviously helps to stabilize and backstop those particular companies, in regards to their specific needs for timely financial infusions, so of.
The bottom line is that the Fed, as the central bank of America, has the capacity, to play favorites, as well as to punish those that are out of favor, and of which, recent history has definitely told us, that the Fed does indeed play favorites, all of the time. This essentially means that our private enterprise system which serves as the backbone of our capitalistic financial system, is clearly not a level playing field. Additionally, and further to the point, those that know what the Fed is going to or not going to do, ahead of time, have immense advantages over all those that do not have that sort of actionable information.
As much as the Fed desires to manage the economy of America, we do so find, that there have been and continue to be, periods of time, of economic high inflation, high unemployment, and of recessions. This signifies, that business enterprises are for a certainty, susceptible to being really hurt when economic conditions thus turn against them, for whatever reasons, and those than that are aided and abetted by the Fed are quite obviously those that are going to be in a whole lot better place, then those others that the Fed has turned their back upon, or simply just ignored.