Jackie Gingrich Cushman

-- "conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate, long-term interest rates;

-- "supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers;

-- "maintaining the stability of the financial system and containing systemic risk that may arise in financial markets;

-- "providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system.

Wow, that's a lot.

The Fed also makes sure that the United States has enough money for the approved budget. In the case of deficit spending (spending more than we take in during a given year, which is what we are doing), the Fed borrows the money from investors on behalf of our government. It can then buy back the securities with money that it prints (don't you wish you could do this).

"Thirty percent of government deficits for 2008, 2009 and 2010 were financed by the expansion of the monetary base of the country's money supply (currency, coin and bank reserves)," wrote Robert Auerbach, professor of public affairs at the University of Texas at Austin, in his June 21 column for The Huffington Post titled, "Does the Stimulus Stimulate?"

Remember, the Fed is independent, subject only to oversight by Congress, which is the group that approves the deficit spending.

Makes you worry a bit.

Makes me wish Dr. Arnold would go to Washington and explain to those currently in charge how the money and banking system work, and administer a few tests with those tough multiple choice questions.

Jackie Gingrich Cushman

Jackie Gingrich Cushman is a speaker, syndicated columnist, socialpreneur, and author of "The Essential American: 25 Documents and Speeches Every American Should Own," and co-author of “The 5 Principles for a Successful Life: From Our Family to Yours”.