Federal reserve?????????
by economy on 11/02/10 at 3:18 am
Why does the USA government borrows money from the federal reserve, which is a private bank instead of making its own?
Why does the federal reserve, which is a private bank instead
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One Comment
robert_dod
Feb 11th, 2010
The Federal Reserve Bank is a federal institution. However, in order to avoid simply printing its own money, it borrows money from the Federal Reserve Bank (listed as a debt to the government, and an asset to the Fed) so that the books balance. It is necessary for accounting purposes. IF the government does not receive enough income from taxs and fees etc., it borrows from the Fed. The Fed loans the money. It can then issue securities (loans) purchased by others (savings bonds, etc.), purchased by private citizens, US and internationally, which it must repay..Currently, China owns the most such securities … to the tune of 800 billion dollars.
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