The Federal Reserve in 90 Seconds

The Federal Reserve in 90 Seconds

The Federal Reserve started in 1913. It was formed by the world's wealthiest bankers on Jekyll Island, Georgia. It’s surrounded by conspiracy, but that’s for another video.

The Federal Reserve works like this:

Politicians promise voters and corporations new projects like infrastructure, social programs, and War so they can win elections.

The politicians vote for deficit spending to pay for those things they promised.

The US Treasury issues a bond or a giant IOU to pay for this debt.

Those are called Treasury bonds or T-Bills.

They are borrowed money, leveraged against you, me, and our descendants, and personally guaranteed by future taxation.

The treasury holds a bond auction where big banks show up to buy the bonds. In exchange for buying the debt, they are paid interest payments from taxation.

Those interest payments are currently 1 Trillion dollars per year.

The banks get to sell some of those bonds to the Federal Reserve above the price they paid for them, creating profit for the banks.

To pay for the bonds, The Federal Reserve writes checks to the Banks.  But the account from which it writes the checks never has any money in the account.

The Federal Reserve gives the checks to the banks, and currency is born.

Confused yet?

The Federal Reserve and The Treasury are exchanging IOUs with the Banks as the middle man and making currency. Nothing else makes the stuff in your wallet but this transaction of broke-ness

Those numbers that they generate and put on a ledger are what you and I mistakenly call money.

But it’s just a batch of exchanged IOUs

Money is a store of value…Currency degrades over time. When currency degrades, we call it inflation.

Nothing is backing the currency in your wallet or your bank. It’s just a receipt for an IOU on another IOU.

The next lesson is on the banks - where the majority of all currency is created through fractional reserve lending practices.