Quick summary of the US Treasury, who they are and what they do

To learn more about the US Treasury, I watched a couple of videos and wrote down notes to help me learn. Here’s one of the videos followed by a quick summary: https://www.youtube.com/watch?v=Ug_q97QKDjk&ab_channel=TDAmeritrade

  • They’re the central bank of the United States.
  • They control the money supply.
  • They keep two economic metrics in check: unemployment and inflation.
  • They have a few tools to influence the economy. Its primary focus is the federal funds rate. The rate banks use when lending to one another.
  • A bank needs a minimum reserve requirement. If they can’t meet it, they’ll ask another bank.
  • Banks make money when they borrow money at a lower rate than they lend it out for. If the federal funds rate increases, they have to increase lending interest rates to be profitable.
  • If the economy shows signs of slowing, the federal reserve will lower short term rates. Resulting in banks decreasing lending rates. Makes it cheaper to borrow and less attractive to save. Leads to increased spending, borrowing and investing. Hoping to expand the economy, companies hire more people, decreases unemployment and increases spending since people have more money.
  • However, if this happens too quickly or for too long, it causes inflation. Inflation: the rise in costs of goods and services.
  • To reduce inflation, the Fed increases the federal funds rate to make it more expensive to borrow money. Businesses reduce expansions and people spend less. The decrease in demand causes prices to fall. Lowering inflation.

Here’s a calendar of the FOMC meetings: https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Here’s the other video followed by quick points: https://www.youtube.com/watch?v=rv6HIzOGX6c

  1. Advises the president
    1. trade
    2. taxation
    3. borrowing
    4. lending
    5. inline to be president (5th)
  2. balances one of the world’s largest checkbooks
    1. largest holder of US debt
    2. they pay for its debt by issuing interest earnings IOUs like securities and saving bonds
  3. makes money
    1. the US mint does the printing but the US treasury secretary decides and when and how much to print
  4. enforces the law
    1. goes after tax evaders, counterfeiters, forgerers
    2. treasury holds auction of government-seized property
  5. Kicks other countries where it counts – the pocketbooks
    1. Cuba, north korea, zimbabwe, lebanon, belarus are all under economic sanctions

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