The Federal Reserve System is the most powerful financial institution in the world, yet most Americans have only the vaguest understanding of what it actually does or how it works. Created in 1913 in response to a series of devastating financial panics, the Fed operates a trillion-dollar monetary machine that influences everything from mortgage rates and job growth to the stability of the global economy. Understanding its mechanics reveals how a small group of appointed officials wield extraordinary power over the economic lives of hundreds of millions of people. The Federal Reserve was born from crisis. The Panic of 1907, which nearly collapsed the American banking system, finally convinced Congress that the nation needed a central bank capable of providing emergency liquidity and stabilizing financial markets. But the political compromises requir ...