What the Federal Reserve Does...

I've been grading AP US Government and Politics exams for the last week in Florida. As it happens, the question I spent the week grading about 1450 times dealt with fiscal and monetary policy. One part of the question required students to describe Federal Reserve powers. Many students have at least a basic understanding. A few are very sophisticated... and then there are the ones who took wild guesses. Among the misinformation, I learned repeatedly that...

The Federal Reserve sets the U.S. government's budget, decides U.S. government spending, prevents the U.S. government from running dangerous budget deficits, controls "everything", is relatively independent of the President and Congress because it's role is enshrined in the Constitution... or is relatively independent of the President and Congress because the role is not mentioned in the Constitution... etc. And then there were the students who completely wandered from the subject matter. One student gravely informed me that the Federal Reserve manages a wildlife refuge. Another misread monetary as military and told me about how the FED is in charge of all U.S. military forces. Another student informed me that the FED has a powerful role in law enforcement, and that without this role at monitoring behavior, Clinton would have gotten away with his affair with Lewinsky.