1 The idea of money as a universal equivalent is familiar to us since childhood. Capitalism has learnt to use money in such a way that it would answer its purpose. Money is looked upon as a hireling of sorts which has to work for its master non-stop. Therefore no one salts money away at home in America. Americans keep their money in the bank so that it should breed more money: as interest, at least, although this is not the most fortunate way to make a profit.
2Money is one of the Federal government's sources of profit: it prints money and lends it out. This is done by the Federal Reserve Bank. All the leading banks borrow money from the Bank at the so-called prime rate. The latter is a vital component of the American finance system. It is not only a means of replenishing the state treasury, but also a regulator of America's financial well-being.
3 The regulation mechanism is simple enough. Supposing the prime rate is five percent. Having borrowed money from the Federal Reserve Bank at a five-percent interest rate, a local bank puts it into circulation (lends it out to its clients) at a seven-percent interest rate in order to make a profit. If the prime rate is ten percent, the bank lends out the money at a twelve-percent rate. This means that when the prime rate is small, you can borrow money from the bank on the easiest terms. In other words, money costs less in this case, and can be safely invested in long-term operations - involving real estate, for example. When the prime rate is high, however, money should be invested chiefly in quick-paying businesses such as stores selling goods in high demand.
4 By announcing another change in the prime rate level, the Federal Reserve Bank stimulates businessmen to reassess the profitability of certain deals and thus, in the final analysis, influences the level of business activity in various spheres of the economy. It would have been impossible to pursue such a policy without a ramified network of local banks.
5 No population centre in America, even the smallest one, is conceivable without a bank building. A small town may have several banks, and in a city there are tens of them. Like any business, a bank is after a profit, above all. Money is the commodity it sells. To put it simply, a bank seeks "to buy" money cheaply (not necessarily from the Federal Reserve Bank), at an annual six percent interest, for example, and to sell it dearly (as credit to a building company) at an annual interest rate of eleven percent. This is what the banks are busy doing. There are many variations with this pattern, of course.
6 Naturally, the banks put their money where it brings them the highest profit. This is why they always keep up to date with the market situation. By shifting money of various "costs" from sphere to sphere, from one geographical region to another, the banks actively stimulate progress in industry, construction and agriculture. Besides this, the banks promote the growth - or cause the demise - of individual population centres or even whole regions.
7 Banks are interested in keeping most of their money in circulation so that it should bring them profit. They seek to reduce lending rates in order to attract buyers. The cuts in interest rates are more than made up for by an increase in the amount of money in circulation.
8 In their pursuit of high profit, the banks sometimes get involved in risky operations fraught with bankruptcy. Therefore, the Federal government takes measures to minimize the danger of banks going broke. Every bank is obliged to take out insurance against robbery or bankruptcy lest the clients should lose their money in any case.
9 The banks cater to big and small companies and individuals.
B. Give Russian equivalents to the following words and phrases:
familiar to us, source of profit, a means of replenishing, state treasury, well-being, annual interest, prime rate, cuts in lending rate, goods in high demand, ramified network, real estate, not the most fortunate way of… , the latter, chiefly, cheaply, dearly, danger, to promote growth, to cause a demise, to influence, to reassess profitability, to keep money in the bank, to keep money in circulation, to attract buyers, to lose money, to make up for losses, to cater to individuals, individual population centers, to pursue such a policy, in their pursuit of high profit, to shift money of different costs.
C. Find in the text English equivalents to the following phrases:
получать прибыль, ссужать деньгами, ссудный процент, брать деньги в банке под 12% годовых, пускать деньги в оборот (обращение), на самых выгодных условиях, быстро приносящее доход дело /предприятие, очень важная часть чего-либо, сокращение, увеличение количества денег в обращении, обязан принять меры, деньги рассматриваются как…, это значит, что…, другими словами, довольно просто, проще говоря, предположим, поэтому, вот чем занимаются банки, вот почему они стремятся сократить процентную ставку, в конечном счёте, в любом случае, так называемый ссудный процент, не обязательно, естественно, прежде всего, по крайней мере.
a) Look through paragraphs 1, 2, 6, 7, 8, write out 6 phrasal verbs and give their Russian equivalents. Define the type each of the phrasal verbs belongs to:
I – do not require object after them
II – the particle is used after the verb only
III – the particle may be used either after the verb or after the object
IV – the particle is followed by a certain preposition