The Federal Reserve was created to stop bank runs. The Federal Reserve was created so that if people all at once try to take out their money from the bank, and the bank doesn't have all the money because they aren't keeping enough in reserves, then the Federal Reserve can loan the banks money to give to people. This only creates more problems because the banks now have to pay back the loans to the Fed. Also, a question that could be asked is where is this money coming from that the Federal Reserve is loaning out?
Chapter 13 Curiosities
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