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					                                                  Banks & Money



          Banks are like any other business but their main product is $$$$$$.

          The main way banks make money is on the interest they charge on
          loans because the money they pay out to depositors is significantly less
          so THEY KEEP THE DIFFERENCE:

                                                                                      The bank just keeps the difference
                                                                                      and makes BANK!!!
          Interest rates the
          Bank charges on loans                                                       ($$$$-$)=$$$
          $$$$




                                                 Interest the bank pays out to depositors
                                                                         $
                    Type of Loan                       Current Interest Rate (Quality Credit)

          Car Loan                                  5.5% ($8000 car loan you pay: $440)

          Mortgage                                  4% ($250,000 mortgage you pay:$10,000)

          Credit Card                               15% ($500 you pay: $75)

                  Deposit Account

          Regular Savings Account                   1% You invest $1000 they pay you $10



                                                                                   (Interest – D Interest)= Profit
Take a look above and see how much money the banks are                             $10,515-$10= $10,505
making off of your money!!! Think about how many clients
bank have, not to mention all the money they make off all the
fees they charge.
   The Federal Reserve- is the central bank of the United States, it
 provides and maintains an effective and efficient payment system,
         regulates banks, & controls the monetary supply.

Ben Bernanke- is the current chairman of the Fed

Controls the Monetary supply:

     1. Raising and lowering the discount rate (interest rate)

          a. Raise (want people to save) cost more to borrow

          b. Lower (want people to save) cost less to borrow

     2. Buys and sells government securities(Open Market Committee)

          a. Fed Buys (want people to spend, putting money into the
             market)

          b. Fed Sells (want people to save, taking money out of the
             market)

     3. Reserve Requirements

          a. Banks are required to hold a specific amount of money in
             their reserves usually 10%

          b. This amount dictates how much money a bank can lend
             to clients

				
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