Why operation accounts are seeing their return reduced?

For investors, knowing what the Fed does lets us know how the financial markets will move, especially when it comes to interest rates and short-term investments. Cue the "Wayne’s World" flashback music as we take a quick trip back to Econ 101…..

A Brief History of the Federal Reserve

Founded in 1913 by Congress after some pretty serious financial meltdowns, the Federal Reserve was set up to make sure the economy didn’t resemble a roller coaster on turbo speed. Over the years, it's taken on more responsibilities, and it keeps evolving to save the day.

Here’s a quick breakdown of what the Fed does (in addition to making headlines): ?

? Crafts monetary policy to keep unemployment low and prices stable.

? Regulates banks to ensure they don’t go rogue and protects your credit rights.

? Maintains the stability of the financial system—think of it as the economy's watchdog. ?

? Provides financial services to the U.S. government and other institutions.

? Oversees the payment systems that keep your transactions moving smoothly.

Now, the "Federal" part? That comes from its structure. It’s like a giant team project with a central board in D.C. and 12 regional Federal Reserve Banks scattered across the country. Each one keeps tabs on its region's economic activity, reporting back so that national policy stays on track.

But one thing you should know: the Fed isn't exactly a puppet on Congress's strings. Yes, the president appoints the seven Board of Governors (and the Senate gives the thumbs up), but their terms are staggered, so no one president can stack the board in their favor. The Fed operates mostly independently—no Congressional allowance needed!

After the 2008 financial crisis, the Fed got a bit of a makeover thanks to the Dodd-Frank Act, which upped its transparency and beefed up consumer protections. Plus, a new player—the Consumer Financial Protection Bureau—now handles many of those duties.

Now for the part that really matters to the financial world: interest rates. The Fed’s most famous trick is controlling the federal funds rate (a.k.a. the rate banks charge each other for overnight loans). This rate, set by the Fed’s 12-member the Federal Open Market Committee, is like a stone thrown into a pond—it ripples out and touches everything from mortgage rates to credit card interest.

So, whether you’re an investor, a borrower, or just trying to understand your operational accounts are seeing their return reduced, the Fed’s moves matter. It's not just boring Econ 101—it’s the engine that drives the economy, and we all hope that their work is successful in helping inflation stay low and our GDP continues to grow!