What Does the Fed Chairman Do?

ByABC News
October 24, 2005, 12:08 PM

Oct. 24, 2005 — -- Ben Bernanke, if confirmed, would be the 14th chairman of the Federal Reserve System since its creation in 1913. Only five men have been in that office in the past 50 years, with Alan Greenspan and William Martin serving terms of more than 15 years each.

What does a Fed chairman do?

Some would argue that the Fed chairman is the most powerful presidentially appointed official in the U.S. government because he directly affects the pocketbooks of every American and American business (and the global economy).

By setting two key interest rates (the discount rate and the Fed funds rate), the Fed is able to set the price of borrowing money in the U.S. economy, spurring growth or diffusing inflationary pressures.

The Fed also controls the nation's money supply -- the number of dollars floating around in the world economy -- by buying and selling U.S. treasury securities.

Who were the previous chairmen?