How Banks make their money

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Banks have what is called a reserve requirement. The reserve requirement is the percentage of money that a bank is required to hold in cash or deposit with a Federal Reserve Bank. Let me explain it to you this way, the current reserve requirement is 3 percent to 10 percent of a banks total deposit...
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So it breaks down like this, say a bank get a deposit of $100 and let's assume that the reserve bank's requirement is 10 percent, the bank can lend out $90. That $90 finds its way back into the economy through purchases and usually is deposited into another bank...
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how does the federal reserve control the money supply? The Federal Reserve System "The Fed" controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made and decreases when they decrease...	2 / 310
Federal Reserve Bank Changing Money Supply One way the Federal Reserve Bank can change the money supply is by purchasing U.S. government securities from financial institutions. They can create “funds” or credits on their balance sheets in exchange for the securities...	2 / 534
Federal Reserve Monetary policy can be implemented by changing the proportion of total assets that banks must hold in reserve with the central bank. Banks only maintain a small portion of their assets as cash available for immediate withdrawal...	2 / 446
Role of Federal Reserve Three tools that Federal Reserve uses to control the economy that grows too quickly or too slow are changing interest rate, changing its reserve requirement, and conducting its open market operations...	2 / 464
Macroeconomic Impact Of The Federal Reserve Bank Macro Impact of The Federal Reserve Bank The University of Phoenix Abstract The federal government has empowered its central bank, The Federal Reserve, with the ability to influence the amount of money available to the U...	7 / 1704
Monetary Policy and the Federal Reserve The money creation process, controlled by the Federal Reserve System, or Fed, is mainly meant to change the total quantity of money in circulation and implementing monetary policy...	4 / 1111
Monetary Policy The Fed’s primary goal is to ensure that the amount of money and credit are balanced to foster continue economic growth without causing inflation. When inflation is so high that currency loses its value, the Fed needs to restrict the money supply in the system...	2 / 421