Hey dad i'm doing a school project on our country's federal bank, do you know what it is?
Our federal bank is our nations main and biggest economic bank. They control our taxes, rate of employment and generally controls the economic system, normally for the general public.
The bank has 3 ways of which they control and regulate the exchange of money, one of which is the Reserve Ratio.
All right I understand but how does the federal bank control all of these so easily?
A Reserve Ratio is the amount of money required that the bank has to keep in bank at all times as a last resort, the more money the bank has the more it can lend out or give back to its customers on a daily bases.
All right what is that?
All right what are the other two?
The other two are called Discount Rate and Open Market Operations. The discount rate in the amount of interest the Central bank charges to to lower banks so they can use the money from its reserves.
Alright what's the last one, also are there any pros and cons about this bank?
Alright the last one is Open Market Operations, it's where the FED buys or sells large public items or bills from banks and security dealers. It's the way the FED buys the public peoples stuff and gives more money to everyone else
As for Pros/cons they main con is that plain and simple, they control our entire economy, one wrong move and we all will suffer. As a pro they do all the work for us and in the end they got the back of the public over the government who is drowning in debt because of the FED