All about Feds!

(This has nothing to do with cops ._. )

What is a Fed???

A fed is the central back of the United States also known as the Federal Reserve, which was created in 1913. When local banks need money, they borrow it from the Fed. "How is this?" you might ask. Well smaller banks buy stocks in the Fed and earn dividends or a profit.

They have the power to encourage or discourage business practices.

How is that possible?

Feds oversees commercial banks which means, they enforce laws that deal with consumer borrowing. They hold money , sells bonds and treasury bills, and issues and controls the circulation of currency. If they believe that you are using the money in a positive way for a business then they can raise discount rates, raise the reserve, and provide them with open market operations. If it is the other way around they can lower your discount rates and make it very difficult for you to borrow the money and proceed to using the money in an illegal way.
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So you better follow the law and keep things in order!

or you may be in big trouble young ladies and gents!