MONEY - Jim Colyer

The Federal Reserve controls the money supply and can raise or lower interest rates. The Federal Reserve System is made up of 12 Reserve Banks. A 7 member board of governors presides over it. Ben Bernacke is the chairman. The Fed regulates commercial banks and dictates monetary policy. The Treasury prints currency and mints coins at the Fed's command. Until 1971, paper currency could be redeemed for gold from the government. In 1971, the U.S. went off the gold standard. People now back currnecy with the faith and condidence that paper money will be accepted for services and goods: food, cars and clothes. The "paper" money is printed on is actually made from cotton and linen. Each bill has its own serial number. Paper money is printed at the Bureau of Engraving and Printing in Washington, D.C. BEP also prints stamps and government checks. New money is delivered to 12 Federal Reserve Banks which deliver it to smaller banks. The smaller banks give the Federal Reserve Banks government bonds in return. The new money is loaned out. Borrowers spend, and the money goes into other banks. One-dollar bill - George Washington in on the front. The signature at the lower left is that of the treasurer of the United States. The signature at the lower right belongs to the Secretary of the Treasury. The green number is the serial number. Every bill has its own serial number. To the right of Washinton is the green seal of the Treasury Department. It contains scales for justice and a key to imply the country's money is secure. 13 stars represent the orignal states. 1789 is the year the Treasury Department was founded. The Great Seal of the United States is on the back of the one-dollar bill. Two circles show its two sides. The pyramid has 13 layers of bricks. The space between the bricks indicates there is room to grow. 1776 is at the base of the pyramid. The eye is the eye of God. There are 3 Latin phrases. "Annuit Coeptis" means "God favored our undertaking." "Novus Ordo Seclorum" means "A new secular order." "E Pluribus Unum" means "One from many." The eagle holds both an olive branch with 13 leaves and 13 arrows. He is prepared for peace or war. His face is turned toward the olive branch. 13 stars are above the eagle's head. 2 dollar bill - Thomas Jefferson is on the front. The signing of the Declaration of Independence is on the back. 5 dollar bill - Abraham Lincoln is on the front. The Lincoln Memorial is on the back. 10 dollar bill - Alexander Hamilton is on the front. The U.S. Treasury Building is on the back. 20 dollar bill - Andrew Jackson is on the front. The White House is on the back. 50 dollar bill - Ulysses S. Grant is on the front. The U.S. Capitol Building is on the back. 100 dollar bill - Benjamin Franklin is on the front. Independence Hall is on the back. Michael and I will try to visit the Federal Reserve Building in Washington, D.C. Larry and I are trying to figure out the nature of the Fedearl Reserve. He says it is an independent agency and privately owned. The Federal Reserve System was created by an Act of Congress in 1913. It is the nation's central bank. Its Board of Governors has 7 members. The President appoints the chairman. Its Headquarters is in Washington, D.C. 12 Reserve Banks are located in major cities. A Boston, Massachusettes B New York, New York C Philadelphia, Pennsylvania D Cleveland, Ohio E Richmond, Virginia F Atlanta, Georgia G Chicago, Illinois H St. Louis, Missouri I Minneapolis, Minnesota J Kansas City, Missouri K Dallas, Texas L San Francisco, California Issuing Federal Reserve Banks and their letters are found in the Federal Reserve District Seal. Much is made of the Federal Reserve's independence. Independence means the central bank may operate free of politics. Members of the board of governors are appointed for 14 year terms by the president. This keeps any new president from packing the board. Central bankers take their independence seriously. Coins are made at two mints. One is in Philadelphia, the other is in Denver. Coins have two slogans stamped on them: "In God We Trust" and E Pluribus Unum (One from Many)." There is a lot of talk about the economy. What is the economy? The economy has to do with the way goods and services get distributed. It deals with wages and prices. Countries may specialize in industrial, consumer or agricultural products. Middle eastern countries export oil. Countries compete in the world market. In a capitalist economy, the machines which produce goods are owned by indivuals and corporations. People work for the owners. In a socialist economy, all the people in the sociey own the means of production. Inflation - rising prices Deflation - falling prices
Contact: jim@jimcolyer.com