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How the Federal Reserve Makes Money

How the Federal Reserve makes Money $$$ UNDERSTANDING THE ROLE OF THE FEDERAL RESERVE Bank of Banks Regulatory Body Is the Bank of Bank's and The Bank of the U.S Government. Regulates financial institutions, manages the nation's money and influences the economy. Controls Growth Can either stimulate or slow the economy by raising or lowering interest rates. WHAT LED TO THE CREATION OF THE FEDERAL RESERVE 30,000 Dif ferent Currencies Not Enough Money Started in 1913 because there were over 30.000 Banks didn't have enough money to honor withdrawals by customers. different currencies floating around the United States. No Faith Controlled Currency Supply Americans had no faith in the banking system. Needed someone to create an "elastic currency". in order to control inflation. HOW DOES THE FEDERAL RESERVE MAKE ITS MONEY The main source of income is Seigniorage revenue. For example: A person has one ounce of gold. $4 He exchanges one ounce of gold for its value in currency. $4 Fed dispensed this currency to the person. This means Fed increased the amount of money in circulation. buys from for $ шЕ: The Fed The US Treasury When the Fed increases the amount of money in circulation, it purchases new currency from the U.S. Treasury for cents on the dollar Fed's Revenue: Feds Expense: Feds Profit: - This profit, i.e. the difference between the actual value and face value of the currency is Seigniorage revenue for the Fed. invests in The Fed Government Securities Interest which is now the Feds new stream of revenue The Fed then invests the reserves in government securities as collateral, and profits from the interest that accrues to its own account. HOW MUCH MONEY DOES THE FEDERAL RESERVE MAKE Feds earnings : Feds Overall Profit: 330% $80 billion $77.4 billion 3.75% 24 24 2007 TODAY The Fed overall profit has grown with its balance sheet from $870 billion in August 2007 to over 2.8 trillion today. 2011 2012 INTERESTING FEDERAL RESERVE FACTS REVENUE $$$$ EXPENSES It has the ability to create as much money as it needs.. The cost of funding for the Fed is basically zero %24 THATS MORE THAN The Fed. THE ANNUAL GOP 95% OF THE USM $16.1 Trillion Banks BEFORE AFTER The value of the U.S dollar has declined more According to an official government report the Federal Reserve made 16.1 trillion dollars in secret than 95 percent since the Federal Reserve was created. loans to big banks during the last financial crisis. WHO ARE THE CURRENT BOARD MEMBERS OF THE FED Ben Bernanke Daniel K. Tarullo CHAIRMAN Sarah Bloom Raskin Janet Yellen Jerome H. Powell VICE CHAIRMAN Jeremy C. Stein WHERE ARE THE FEDERAL RESERVE BANKS THAT COLLECT ALL THAT MONEY The federal reserve banks are named after the location of their headquarters: PHILADELPHIA BOSTON CLEVELAND MINNEAPOLIS O NEW CHICAGO YORK SAN FRANCISCO RICHMOND KANSAS CITY ATLANTA DALLAS ST. LOUIS TIM TIMOTHYSYKES.COM 1 - 2 - 3 - 4 - 5 - 6 - give back

How the Federal Reserve Makes Money

shared by eshagoyal24 on Mar 19
Designed for Timothy Skyes this infographic illustrates how the Federal Reserve works, why it was created and how it makes money...


Timothy Sykes


Esha Goyal




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