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Blue Chip Kids: What Every Child (and Parent) Should Know About Money, Investing, and the Stock Market by David W. Bianchi

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CHAPTER 13 THE ECONOMY (THE BUSINESS OF BUSINESS)

It's not just about picking good stocks. To be a good investor you also have to understand what is going on with the overall economy because all businesses are interdependent. Your stocks are not likely to do well if other businesses are doing poorly. Here are some things to look at to get a sense for how the economy is doing.

The Federal Reserve (The Fed)

To have some basic understanding of the U.S. financial system, you need to at least know that there is this thing called the Federal Reserve, more commonly known as the Fed. It is an agency of the U.S. government. It reports to Congress but is independent of the executive, legislative, and judicial branches of our government.

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The Fed is the central bank for our country, the top dog, the main man, the king of banking and money in the United States. Currently, the chairperson of the Fed is Janet Yellen. She is the first woman ever to head the Federal Reserve.

The Fed was created by Congress in 1913 to help stabilize our financial system after a series of financial crises. The Great Depression in 1929 resulted in even further powers being granted to the Fed as the United States struggled to get control over an economy that was weak and facing collapse.

Countless books have been written about the Fed. Colleges teach courses on the Fed and its role in our economy, and you ...

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