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Finance Allah Shmoop What is the nineteen thirteen Federal Reserve

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Act Well for starters it created the Federal Reserve Thank

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you Woody Wou okay So the Federal Reserve Act think

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reserve of cash and or gold and or other securities

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and assets that would serve to buffer volatile financial times

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is the US grew to become a dominant global power

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Will the Federal Reserve is essentially the mothership of banks

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or central bank as it is called in other countries

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which is kind of the water spigot in the price

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and velocity at which it loans money to sub distributors

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of loans A US banking system Will the act divvied

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up the country into twelve regions right here twelve each

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with its own board of directors And then the Federal

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Reserve itself has seven board members purposely an odd number

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two Both reflect the personalities of the people and the

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need for tiebreaking facility Well they are the FOMC or

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funk or Federal Reserve's Open Market Committee who live under

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strict rules regarding meetings held discussions had And what kind

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of bagels tohave on the conference room table for Friday

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morning meetings Remember that the country only fifty years ago

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before this act was almost split in half with the

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you know their existing a Yankee currency more or less

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And a Confederate currency and then other regional currencies kind

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of popped up around the edges and there was gold

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and there was always that nerdy whole wanted to pay

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in bitcoin So the Federal Reserve act unified the country's

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currencies into one common currency the US dollar And under

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that massive scale tons of efficiency in managing and leveraging

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that money could be had And in doing so the

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US dollar became almighty It was the global standard currency

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of choice And it also let banks catalyzed the American

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dream at least in America by virtue of their ability

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to grant mortgages right like most of the wealth in

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this country is stored in homes people own So yeah

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it's all powerful stuff in a world where the common

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man you know for Millennia before had never dreamed of

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actually owning his own castle no matter how small it

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wass Well one tool that the Fed then used was

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to basically say to banks We literally give you a

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license to print money and it's okay Hey that you

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make a profit but you have to live by our

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rules But if you do you you know make bank

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Yeah well that's probably where the term came from Well

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it was that ability to print money that became the

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central weapon the U S government then used to manage

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the economy I'ii stimulate her giggity when she was cold

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and cool her off when she was you know inflation

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e Well the Fed created what is called a discount

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window where banks line up to buy discounted money or

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credit They mark it up and then resell it Tio

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cash thirsty Joe six packs all around the country so

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inside of each of the twelve regions of a bank

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wanted to be a federal bank I live under the

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rules of the Fed so that they got cheap U

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S dollar backed loans from the Fed which they would

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then mark up and sell Joe Consumer who wanted to

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buy a home or a mule or a butter churn

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or two thousand Well then they had to have skin

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in the game That is the regional banks had to

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go raise their own capital like you know asking grandmama

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for money or raising it from a consortium of shareholders

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who would then buy in or invest that capital as

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part of their commitment to the long from establishment of

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credible banks in the region That investment wasn't sellable or

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transferable and the cash they invested well paid no interest

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That quote gift unquote of no interest was kind of

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a sign that well of their you know financial commitment

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to the partnership would grow and do well is an

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asset Our investors would lose everything and note the word

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incredible Here It means believable trustworthy honest Well it doesn't

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take much letter tweaking to make that word credit Credit

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tha bull and yeah that's where all these turns to

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write So who made all this happen Who made it

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up Who implemented Well if you ever get a chance

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to see Hamilton Hamilton the stage play not the TV

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commercial for bulk pig meat see it You may have

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to take out a bank loan You know just buying

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but cheap tickets here That's what we're hoping for Yeah

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