g The Federal Reserve System is responsible for establishing monetary policy. It has a significant degree of independence from the executive, legislative and judicial branches of government. Its policymakers, the seven-member Board of Governors, serve 14 year terms with one member appointed every two years. There are 12 Federal Reserve District Banks spread around the county rather than one central bank in Washington, D. C. to carry out the policies established by the Board of Governors. Why do you think the Fed was set up in this manner

The FED is legally "independent within the government", which means that it can make any decisions regarding monetary policy, but at the same time it is accountable for them (to the Congress, not the President).

The reason behind this independence, is that if the FED could be managed by the President, then if the President felt that he needed to boost the economy in the short run, e.g. before an election, it could engage in a large expansionary monetary policy, but after a few months the economy would probably collapse.

Members of the FED are supposed to be technical professionals, while politicians are politicians (exactly the opposite of technical professionals). Members of the FED should not worry that if they do not follow the orders of the current President, he/she would retaliate against them.

The FED was divided into 12 districts as a regional division since communications have been good, easy, safe and stable for the last 60-70 years or so, and the FED is much older. Besides communication issues, it is also a way of decentralizing the organization.

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