The Evolution and Mechanics of Fractional Reserve Banking and Money Creation in the United States

Delving into America’s financial past, this essay uncovers the intricate journey of banking and money creation. From early colonial practices to the Federal Reserve’s modern role, it explores lending, debt, and economic growth, revealing the delicate balance shaping national wealth and global stability in an ever-evolving monetary system.

Accounting of U.S. Dollar Money Supply
Pre-1791: $5–15M - Colonial Era →
1791: $10–20M - First Bank →
1811: $25–50M - No Central Bank →
1816: $50–100M - Second Bank →
1836: $150–250M - Wildcat Banking →
1863: $500–700M - National Banking Acts →
1913: $15–20B - Federal Reserve →
1933: $30–35B - Gold Standard End (Domestic) →
1971: $600–800B - Bretton Woods End →
2008: $8.2T - Quantitative Easing →
2020: $18.1T - COVID-19 Response →
2025: $21.56T - Modern Federal Reserve

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