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12
7- appt 14 yrs
12 Bankers
FOMC
Board of
Governors
Federal Advisory
Council
Chairman
Ben Bernanke
12 Federal
Reserve Banks
25 Branches
3000
Member
Banks
1913
The Anatomy of a Dollar Bill
Dollar Bill Facts
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US currency bills are 2.61 inches wide and 6.14 inches
long; they are .0043 inches thick and weigh 1 gram. (All
US currency was made smaller in 1928)
All US Bills are cloth, not paper – 25% Cotton, 75%
Linen with red and blue synthetic fibers distributed
throughout.
Currency is printed by the Bureau of Engraving
and printing. Each bill, regardless of denomination costs
4.2 cents to make. The BEP prints 16,650,000 $1 bills
each day.
The $1 bill has an average lifetime of 18-22 months.
Damaged bills are returned to the Fed and shredded.
Last year, the Fed destroyed around $7.5B worth of
currency
Seal of Issuing
Federal Reserve
District
B = New York City
Serial Number
Engraving Plate
Serial Number
Issuing Federal
Reserve District
2 = New York City
Design Date
Engraving Plate
Identifier and Bill
Location Identifier
Signatures of Treasurer and
Treasury Secretary
Seal of US
Treasury
Great Seal of the US
“In God We Trust”
added by
Eisenhower in
1957
The Great Seal (Front)
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13 leaves in the Olive
Branch (Right Talon)
13 arrows in left talon
13 stars overhead
13 Stripes on Shield
(Blue Bar represents
congress)
E Pluribus Unum:
“From Many Comes
One”
The Great Seal (Back)
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The Pyramid had 13 steps
MDCCLXXV1 = 1776
The Pyramid is unfinished
(the US is an ongoing
project)
The western face is dark (the
western US had yet to be
explored
The deity watches over us
Annuit Coeptus = “God Has
Favored our Undertakings”
Novus Ordo Seclorum = “A
New Order Has Begun”
Functions of the Fed:
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Regulates financial institutions
Issues coin and currency
Manages money supply
Makes short term loans to banks
Provides banking services to Gov’t
Provides financial services to banks
Keeping a sound money system:
• Destroys unfit money
• Detects counterfeit
money
• Removes obsolete bills
Services to Government:
• Accepts deposits
• Issues checks
• Redeems bonds and gov’t
securities
Services to Banks:
• Distributes currency
• Clears checks (Clearing House)
• Transfers money
• Makes loans to banks
• Supervises banks
Federal Reserve
Philadelphia
Your Bank
You
Federal Reserve
San Francisco
Check
Clearing
Friend’s Bank
Your Friend
Sources of Income
• Interest on Government
Securities
• Interest on short term loans
• Fees for services i.e.. Check
clearing
The Fed’s main function
is:
Monetary Policycontrolling the money
supply.
Three tools the Fed uses to
control the money supply:
• Discount Rate
• Reserve Requirement
• Open Market Operations
Discount Rate:
The interest rate that
the Fed charges
member banks for
short term loans.
Reserve Requirement:
The percentage of a
banks deposits that must
be set aside and not
loaned.
Open Market Operations:
The buying and selling of Government
Securities (Bonds).
Fed Buys`
Fed Sells
The Fed
13 Fill-In (word
bank)
12 True, False
9 Multiple Choice
3 Lists (of 3)
1 Chart
In Your Journal
• Paragraph form
• What happens if there is too much or too little
money in the economy? (What conditions occur?
Use the words recession and inflation)
• What could the Fed do to fix these issues?
– Reserve Requirement
– Discount Rate
– Open Market Operations