What are your thoughts on Federal Reserve after reading the following?

- How the Fed's Moves Affect You?

If you are like me - I don't always understand what the Federal Reserve does but it often seems that they wield quite a bit of power.So, I came across this article by David Payne that gave a nice explanation of who they are and what they do.

Apparently the Federal Reserve does not have a budget constraint.It can by assets by writing checks on itself (oh, that's nice).It can never go bankrupt - so what keeps it from creating as much money as it wants - nothing.That is hard to understand but there can be an effect from creating too much money - it might cause inflation as more electronic dollars and paper chase a slow growing supply of goods and services.So if you hear of hyper-inflation in some countries, this is what has happened - they tried to create too much money to put in the economy and goods and services didn't keep up.

But for the US, our inflation has remained very low and appears it will remain low for some time to come.So, the Feds have been pumping trillions of dollars in the economy and keeping rates near zero (think about loans and mortgages and the rates you pay for those loans).But if you are saving with these rates so low - you won't make anything but if you need borrow - it's a good situation for you.

If you invest in the stock market - these low rates on bonds just don't help to get decent returns so while in this situation, it seem that we need to consider high quality, dividend paying stocks which will help offset those lower returns.Remember returns are different from dividends.

Hope that helps in understanding the Federal Reserve.