How the Federal Reserve Makes Money

Do you know what made the Federal Reserve so much money? It wasn’t because it was the central bank of the United States – there were many factors that lead to it generating money.

It was the way the American people were responding to the banking system in early 1900’s that lead to it’s creation.

  • Americans had little to no Faith in the current banking system.
  • 30,000 Different Currencies were floating around the United States in the early 1900’s.
  • Banks didn’t even have enough money to honor some Americans withdrawals.
  • Download a PDF version of this post.

To help you understand how the Federal Reserve works, why it was created and how it makes money, I decided to create an infographic to show you how:

Click on the image below to see a larger view

How the Federal Reserve Makes Money

Conclusion

Never take a withdrawal for granted when you go to the bank. It’s because of the Federal Reserve that your money is insured.

When interest rates are low, keep in mind it’s because the FED is trying to boost the economy. And when they are high, they are trying to stabilize things. The FED also can print unlimited money and that the cost of doing this is virtually zero. Their overall profit has raised nearly 330% in less than 10 years due mostly Seigniorage revenue.

So what do you think about the FED?

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