J1_BanksAndTheFed_Student

J1_BanksAndTheFed_Student - Banks and the Federal Reserve...

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Banks and the Federal Reserve Banks and the Federal Reserve Readings: Frank/Bernanke Book Chapter 10 Money, Prices and the Federal Reserve
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Central Bank What is a Central Bank ? A bank for banks. U.S. Central Bank is called the Federal Reserve. Other countries Australia - Reserve Bank of Australia England - Bank of England Germany - Deutsche Bundesbank Israel - Bank of Israel Korea - ……. …… - Sveriges Riksbank
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What Does a Central Bank Do? Who does a bank borrow money from when it needs more? What does a bank do when it runs out of coins or currency? How does one bank move money to another bank? How can businesses and individuals buy (or sell) government debt? Who sets the rules that govern banks? Who ensures stability of a country’s currency?
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Multiple Choice Question What is the Most Powerful Unelected Position In the U.S.? a) U.S. Secretary of Defense Robert Gates b) U.S. Secretary of State Hillary Clinton c) Head of NATO Jaap de Hoop Scheffer d) Professor’s wife Boss Kim
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Current Chairman Ben Bernanke 1953 - Chairman of the Fed for 1+ years Prior to being chairman of the Fed he was Chairman of the Economics Department at Princeton Professor at Stanford, NYU and MIT. Has spent his life studying the ……
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Previous Chairman Alan Greenspan 1926 - Chairman of the Fed for 19 yrs. Prior to being chairman of the Fed he was Chairman of Council of Economic Advisors under President Ford Chairman of the National Commission on Social Security Reform 1981 – 1983 and served on the Commission which created the All-Volunteer Armed Forces.
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How Powerful is the Fed? Recession that started in …… was planned and caused by Paul Volcker, then chairman of the Fed.
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Why Was the Fed Created? Fed created in 1913. Prior the U.S. did not have a Central Bank. Created because “Panic of ……” In 1907 F. Augustus Heinze one of the richest men in Montana decided to corner all the copper shares on the NYSE. He borrowed heavily from the Knickerbocker Trust company. He failed to buy up enough shares. The price sank and Heinze could not pay back the loan to the Knickerbocker. The “Knick” was one of the major banks in country and it suddenly did not have enough money to pay off other depositors. The “Knick” was broke or ruptured .
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Cornering the Market To understand cornering market need to understand first Short Sales Second, mechanics of a corner. Simple Idea in Cornering Market. If you are successful in a corner you become rich beyond your wildest dreams.
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What Is a Short Sale? Most people go “Long” on a stock, bond or other financial product. Going long is simple – You buy today and sell tomorrow at a (hopefully) higher price. Your upside is infinite and downside is what you paid.
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J1_BanksAndTheFed_Student - Banks and the Federal Reserve...

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