Who Controls Your Money? The Truth About the Federal Reserve and RBI
USA
In America, money is controlled by the Federal Reserve.
Now let’s understand some big words.
What is a Bond?
Imagine you ask your friend:
“Can you lend me $100? I promise to return it after 1 year with $10 extra.”
That written promise is like a bond.
So…
A bond is just a promise paper.
The government says:
“Lend me money now. I will return it later with interest.”
Simple.
Who is an Investor?
An investor is someone who gives money hoping to get more money later.
Example:
If you give $100 to the government and after 1 year you get $110…
You are an investor.
Investors can be:
Rich people
Banks
Big companies
Even pension funds
What Happens Next?
If the U.S. government needs money, it sells bonds.
Investors buy them.
Sometimes the Federal Reserve buys them.
When the Federal Reserve buys bonds, it creates new money digitally.
That new money enters the system.
More money starts moving.
But think…
Did the country suddenly produce more food?
More houses?
More petrol?
If more money chases the same goods…
What happens?
Prices rise.
That is called inflation.
So ask yourself:
If prices go up but your salary stays the same…
Are you getting richer?
Or poorer?
India
In India, money is controlled by the Reserve Bank of India (RBI).
Let’s explain the big words.
What is a Bond?
If the Indian government needs money, it says:
“Please lend us money. We will return it later with extra interest.”
That promise paper is called a government bond.
It is just an IOU.
IOU means:
“I Owe You.”
Simple.
Who is an Investor?
An investor is someone who gives money now to get more money later.
Example:
You give ₹1,000.
After some time, you get ₹1,100.
You invested.
Investors can be:
Banks
Big companies
Rich individuals
Retirement funds
What Happens After Bonds Are Sold?
The government gets money.
It spends it.
That money moves in the economy.
Sometimes RBI also buys bonds.
When RBI buys bonds, it creates new money digitally.
Now more money is flowing.
But ask yourself:
Did India suddenly produce more vegetables?
More houses?
More petrol?
If money increases faster than goods…
What happens?
Prices go up.
That is inflation.
So if you saved ₹1,00,000 five years ago…
Does it buy the same today?
No.
It buys less.
Thought
Money is not magic.
It is a system.
If you understand:
What bonds are
Who investors are
How new money is created
You stop feeling confused.
So ask yourself:
Are you just earning money?
Or are you learning how money works?
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