2007-03-21 08:47:17 · 7 answers · asked by rooster 5 in Politics & Government ➔ Other - Politics & Government
Why does it cost you money to borrow money from *any* bank?
Because the bank needs to pay it's expenses like salaries, etc.
The difference with the Fed is that it is considered a not-for-profit. So at the end the year, all 'profit' (i.e. excess interest earned) is turned over to the Treasury.
So when the Federal Reserve buys a T-Bill, 80%+ of the interest is returned. Not a bad deal for the tax payer.
2007-03-21 14:04:58 · answer #1 · answered by gray shadow 6 · 0⤊ 1⤋
We're not borrowing from the federal reserve. We're borrowing through the federal reserve, or from bonds held in reserve.
Either way, there are interest payments that need to be paid.
2007-03-21 08:53:03 · answer #2 · answered by coragryph 7 · 1⤊ 0⤋
Those interest rates are controlled by the fed as part of monetary policy. By adjusting certain interest rates and reserve ratios they can adjust the money supply. The interest rate is just another control the fed has on inflation.
2007-03-21 08:52:18 · answer #3 · answered by Anonymous · 0⤊ 0⤋
simple when you borrow money from the bank you pay interest. when they borrow from the federal reserve they pay interest. that's why.
2007-03-21 08:57:17 · answer #4 · answered by insane 6 · 1⤊ 1⤋
Cause without such charges the dollar would be worth nothing...it would then be the peso
2007-03-21 08:56:34 · answer #5 · answered by Johnny Mek 4 · 0⤊ 2⤋
because they have to pay me interest on my bonds.
2007-03-21 10:26:01 · answer #6 · answered by Anonymous · 0⤊ 1⤋
Some idiots have to pay the fat cats salary and his mansion and the nanny and the mistress and..........................
2007-03-21 08:57:40 · answer #7 · answered by Anonymous · 0⤊ 2⤋