Money in the Real World

Where Does Money Come From?

Money is everywhere. It is used all over the world to pay for services, purchases, food, loans, and more. You may know what money is by now, but do you know where it comes from? The answer may surprise you.

The Treasury and the Federal Reserve

The Department of the Treasury badge Money in the United States comes from the U.S. Treasury and the Federal Reserve. The Treasury is in charge of printing new money when the country needs it. The Reserve is in charge of getting loans for money when the government does not want to print anymore. We will talk more about loans a little bit later, but for now, know that the government borrows money from other people and other countries to pay for the things it needs.

Why does the government have to borrow money when it could just print more?

Federal Reserve System badge If the Treasury just printed money every time the government needed it, all of the money we use would be worth less than it is now. Think about when your teacher gives you a gold star for doing something good. If she gave everyone else a gold star “just because,” your star would not feel as special, right? When more money goes out to the public, it makes the money worth a little less in value. That’s why the Federal Reserve may borrow money instead.