I must say that the tour of the Federal Reserve Bank is a very eye-opening experience for anybody who cares even a smidgeon about money. We walked in the front doors and were greeted by two friendly security guards and a metal detector. After the security precautions, my fellow CBOE interns and I proceeded to learn about the Federal Reserve Bank, their money-making schemes, and world finances in general. During my encounter, the whole educational portion of the experience was orchestrated by a man named Jerry Nelson. He is the most knowledgeable person I have ever met concerning the macrocosm of money and many of its various microcosmic factors. He had a pretty infallible array of factoids pertaining to the magnitude of the number 1 trillion (US national debt is approximately 16.7 trillion), and the possible influences on and effects of money. The information was mind-blowing. One trillion dollar bills weigh 1.1 million tons, there was once such a thing as a half-cent and it could buy a hand-full of candy, Gas used to be cheap; yadda, yadda, yadda.
There was a plethora of insightful information which would benefit people who know nothing about how banking systems create money for the United States, how the Fed affects their lives, inflation etc. Some of this information is basic college course level, such as bank loan money creation, and interest rates. However, the real wealth of info came from Mr. Nelson, like a fact bank he was. It made me think outside of the box; for instance, if ocean-floor gold was harvestable in a cost-effective way then the proceeding governmental profits could theoretically erase all national debt. This is albeit a very conceptual idea. On the negative side of uncovering buried treasure, what would that influx of gold do to existing markets and what would corresponding inflation be? Something I have always personally wondered about the banking-loan money creation model is what happens with all the defaulted loans out there? In a perfect world everybody gets rich, but that is not always the case, businesses fail, money is lost, people go broke and loans do not always get paid.
Money never ceases to exist though. There were a few cool gizmos other than the informational video and discussion, such as an interactive “guess-which-bill-is-counterfeit-and-which-bill-is-real” game for all aspiring cashiers, bank tellers, and counterfeiters; a rotating cube of hundred dollar bills summating a million dollars; and a projection of what 1 million dollars will be worth in the future factoring in inflation. Oh, they also give out bags of free money to visitors!*
Overall the experience was very pleasant, and I thoroughly enjoyed learning about money. The experience will make you think more ponderously about money and for the less financial savvy attendant you quite possibly could astound your friends with interesting facts, I know I did.
*All free money comes in shredded, non-legal tender format
Note- This is one of a handful of blogs being submitted by CBOE summer interns. Derek and the rest of the interns visited the Federal Reserve Bank of Chicago last week.