Listen Money Matters - Free Your Inner Financial Badass. All The Stuff You Should Know About Personal Finance.

   Larry Ludwig from Investor Junkie is our guest today to explain what the Federal Reserve is, does, and why you need to know.  Put simply, the Fed sets monetary policy and either adds or removes money from the system. There are twelve regional Feds across the country to help manage local banks. It was created in 1913 as a way to prevent feature economic disasters. Bit of a fail I think. The chairperson is appointed by the president but is supposed to operate independently of the government. Prior to 1971, we operated on the gold standard so the Fed made sure the amount of money matched the amount of gold. Now we operate on a “faith based” system where we rely on the government to determine the value of money. In order to help stimulate the economy after the crash, the Fed allowed banks to borrow money at 0% interest. The rate has been that low for seven years. Lowering the interest rates is meant to stimulate the economy. When rates are low, people can borrow money to buy things they couldn’t afford befor