When most people think of the Federal Reserve, they think of the national debt, inflation and bailouts. The Federal Reserve is responsible for monetary policy as well as regulation. Since the Great Inflation, the Fed has played an increasing role in the economy. In response to the Great Recession of 2008, an independent Federal Reserve played its most significant role in a financial crisis. Many have criticized the Fed's response and questioned its influence. Since its creation in 1913, the Federal Reserve has seen its power and role in monetary policy increase considerably. Is this power too much within a single entity or is there enough oversight in what it does? The Federal Reserve had humble beginnings. In the 1800s, “bank runs” were normal. In times of financial panic, worried consumers withdrew all their money. These massive rushes would lead to a shortage of foreign currency. As a result, many banks failed when they ran out of money and were unable to service their deposits. After years of economic instability, the Federal Reserve Act of 1913 was passed by Congress. The Federal Reserve was responsible for monitoring and regulating the financial sector and monetary policy. The Fed would lend money to member banks or chartered banks to ensure that there was enough money available in the economy. Each member bank was also regulated by the Fed and was required to hold a deposit with one of the 12 Federal Reserve banks. (Timberlake). The Federal Reserve was a lender of last resort to member banks and the federal government. The intention was to allay fears and stabilize the economy. The Federal Reserve also monitored the transition from the gold standard to a paper currency. The transition had to be regulated since gold s...... middle of paper ......ijffinger, Slyvester CW and Jakob De Haan. The political economy of central bank independence. Rep. Number 19. Princeton: Princeton U Printing Services, 1996. Web. April 10, 2014. Kohn, Donald. “Federal Reserve Independence in the Aftermath of the Financial Crisis: Should We Be Worried?” Business Economics 48.2 (2013): 104-7. ProQuest. Internet. February 23, 2014. Meltzer, Allan. Learn about politics from the history of the Federal Reserve. Representative Social Science Research Network, February 4, 2010. Web. April 10, 2014. Meltzer, Allan H. “Origins of the Great Inflation.” Federal Reserve Bank of St. Louis Review (2005): 145-75. Internet. February 14, 2014. Morrison & Foerster. Advertisement. The Dodd-Frank Act: a checklist. NP, 2010. Web. February 14, 2014. Timberlake, Richard H. “Federal Reserve System.” The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. February 14. 2014.