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Managing the Nation’s Economy

In 1913, Congress created the Federal Reserve System. The "Fed" is our nation's central bank. This bank is made up of a Board of Governors located in Washington, D.C., and 12 Federal District Reserve Banks that are regionally located around the country. Congress spread out the locations of the banks so that no one bank would get too much power.

The Board of Governors is also known as the Federal Reserve Board. These people oversee our country's monetary policies. This means they make decisions about the nation's supply of money and credit. The Federal Reserve is the world's largest bank account, so this is a big responsibility.

Almost all government checks are paid using accounts maintained at the District Reserve Banks. When people and businesses pay taxes, most of these moneys are placed into these accounts. These banks also sell and redeem government savings and securities like Treasury bills and savings bonds.

The Fed also prints and distributes the paper money we use. The power to print money is very important in the government's ability to influence the economy. Why is this exactly?