The U.S. Federal Reserve is one of the most powerful central banks in the world.

The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation’s central bank.

Other notable central banks include the Bank of England, the Bank of Japan, the Swiss National Bank, the Bank of Canada, and the Reserve Banks of Australia and New Zealand.

How Does the Federal Reserve Make Money?

By purchasing government debt obligations, central banks such as the Federal Reserve provide a politically attractive alternative to taxation when a government needs to increase revenue.

As an example, in October 2008, Congress passed the Emergency Economic Stabilization Act, which authorized the Treasury Department to spend $700 billion to combat the financial crisis.

The Treasury has been distributing the money via an “alphabet soup” of different programs. Here’s a running tally of companies getting TARP funds.

🚨 As a result of giving out all these loans, the central banks make profits from the compounding interest they collect.

It’s very similar to how credit card companies make money.

Central banks bail out various organizations and institutions, in exchange for interest fees.

Now imagine how much interest they are collecting when they loans out TRILLIONS of dollars…

Checkout this list that showcases the TRILLIONS of dollars Central Banks have distributed to various institutions and organizations.

Some might argue that central banks are the most powerful institutions in the world.

The Federal Reserve Board had an estimated net income of $107.8 billion during 2021, of which $107.4 billion was remitted to the U.S. Treasury as required under the Federal Reserve Act.

The Federal Reserve Act requires the Reserve Banks to remit excess earnings to the U.S. Treasury after providing for operating expenses, payment of dividends, and the amount necessary to maintain surplus.

The 2021 audited Reserve Bank financial statements are expected to be published later this year and may include adjustments to these preliminary unaudited results.

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ABOUT THE WRITER:

Elena Patestas is a journalist and writer for Valuetainment media. She attended Pepperdine University in Malibu, California, and Adelphi University on Long Island, New York. She was born and raised in Roslyn, New York, and currently lives in Miami, Florida.

Elena is passionate about bringing positive change to our world and believes education is the root to solving many societal problems. After overcoming a chronic health condition, Elena became passionate about health and believes food is the key to preventing dis-ease and achieving optimum health.

Amongst her many goals, she hopes to bring positive, impactful change to our world to create a healthy, financially sound, and unified society.