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25 Responses to “Banking 14: Fed Funds Rate”

1. 
   Comment by stonecold641
   June 21st, 2009

   he almost said …
   he almost said at 3.42
2. 
   Comment by bmlong137
   June 21st, 2009

   The system doesn’t …
   The system doesn’t work for one reason. Politics will inevitably get involved with the central bank’s operations in order to spend more money themselves to get more votes. This is perpetual, eventually spiraling the central bank out of control. This is why a fiat currency always fails…monopolistic greed from a monopolistic government. Now if it were controlled by a computer….
3. 
   Comment by jackuy12345
   June 21st, 2009

   wow so u saying u r …
   wow so u saying u r intelligent and u know many stuff about banking? why dont u go to white house right now and tell obama what u can do and u can save the whole world!!! like u can do that? no cuz u suck
4. 
   Comment by jonald77
   June 21st, 2009

   i have yet to hear …
   i have yet to hear you make an intelligent comment. I don’t think you know a thing about banking. Follow along with the rest of the sheeple then.
5. 
   Comment by jackuy12345
   June 21st, 2009

   HERE COMES AGAIN …
   HERE COMES AGAIN FOOL u r just a all talk old retard that is useless to this world, seriously? if u can save america then ing go on the news and tell all the ppl in wall street what they suppose to do then!! do something good besides talking with me right here, u r just a all talk fool
6. 
   Comment by jonald77
   June 21st, 2009

   ur an idiot. The …
   ur an idiot. The system is unsustainable. I’m not telling you that I have the answer to fix this system. I am saying that we need to build a new system based on good math. This one cannot last. Fiat currency systems always lead to ultimate destruction, usually from overprinting. The dollar will continue to fall in the future, but I am prepared for it. I would suggest you do the same.
7. 
   Comment by jackuy12345
   June 21st, 2009

   yea maybe u did go …
   yea maybe u did go to college but u didnt pay any attention to the teachers cuz what u say right there is stupid and does not work on our economy world right now. if u can figure how to save the economy then everybody can save the world, but its not true, not even ppl from hardvard knows how to save the economy so stop bullshitting random stuff out
8. 
   Comment by jonald77
   June 21st, 2009

   Yes I went to …
   Yes I went to college, and got a minor in economics. I have never copied anything from wikipedia. What in particular do u have a problem with in my discussions? Or are u just trying to be a douche?
9. 
   Comment by jackuy12345
   June 21st, 2009

   You obviously have …
   You obviously have no idea what you are talking about and probably never went to college. Or if you did, you did not pay attention. btw, nice copy paste right there from wiki or other website lmao u have no idea what u talking about u just copy paste
10. 
    Comment by jonald77
    June 21st, 2009

    u need to do some …
    u need to do some research on the banking system
11. 
    Comment by jackuy12345
    June 21st, 2009

    i dont think u have …
    i dont think u have any idea of what u talking about
12. 
    Comment by mustardy
    June 21st, 2009

    they didn’t give …
    they didn’t give treasury money, they BOUGHT treasury notes on the open market
13. 
    Comment by FranceParisian
    June 21st, 2009

    Hey thanks a lot, …
    Hey thanks a lot, will definitely check it out. Very kind of you to share this site.
14. 
    Comment by jonald77
    June 21st, 2009

    If you want a good …
    If you want a good basic rundown of why the system is unsustainable, there is a good presentation at chrismartensen . com. Its a series of power point presentations with him talking, but its very informative. The banking and debt information especially. He’s a retired fortune 50 VP who sold his house and got out of the market 2 years ago because he realizes what happens in the boom/bust cycle created by the Fed. I have followed his advice for the last 2 years, and have done well in this market.
15. 
    Comment by FranceParisian
    June 21st, 2009

    I guess this is …
    I guess this is incorrect! I need to research more on this and if I am wrong I would welcome correction
16. 
    Comment by FranceParisian
    June 21st, 2009

    Hi Sal,

    What …
    Hi Sal,

    What happens now to the world gold reserve? Who actually owns them now?
17. 
    Comment by carracer481
    June 21st, 2009

    IF the FED doesn’t …
    IF the FED doesn’t make money then explain how we owe them 40% of our massive national debt!
    You are smart about how banks work but you are missing a crucial point, If they gave treasury money we wouldn’t owe them money.
18. 
    Comment by Roshibear
    June 21st, 2009

    Thanks to these …
    Thanks to these videos I get how OMOs work. What I am still confused over is how they work in an environment where the FED is already selling treasuries to finance it’s budget deficit as this has the net effect of draining money out of the system which in turn would raise the interest rates. So then to lower interest rates the FED must be performing both actions simultaneously adjusting each in relative relationship to meet it’s goals, is this correct?
19. 
    Comment by jonald77
    June 21st, 2009

    you’re correct, he …
    you’re correct, he believes that the FRS creates productivity and stimulates the economy through growth in the money supply. The fallacy that he doesn’t ess in these videos is that the FRS is not sustainable. It helps to create a boom/bust economy, and eventually bleeds economies dry because the banks are the leaches, sucking the lifeblood out of the system.
20. 
    Comment by spitius
    June 21st, 2009

    Looks like Sal is …
    Looks like Sal is defending the Federal Reserve System…..why so?
21. 
    Comment by pitty031
    June 21st, 2009

    Lucidly explained, …
    Lucidly explained, Please keep up the good work!
22. 
    Comment by AFGddddd
    June 21st, 2009

    great explanation. …
    great explanation. Thanks
23. 
    Comment by footlestool
    June 21st, 2009

    I did some more …
    I did some more research and seem to have an answer to my question. I didn’t realize that adjusting the interbank loan rates makes it more/less enticing for banks to dip below their reserve ratios, because of the availability of cheap bank-to-bank loans. In other words, being able to quickly borrow cheap funds from another banks provides an incentive for banks to lend more on a daily basis. Does that sound right?
24. 
    Comment by footlestool
    June 21st, 2009

    Sal, I’m confused …
    Sal, I’m confused about what happens after the Fed injects cash into the markets. I see why the bank (in your example) that is under its reserve ratio wants to increase its cash ets. But I don’t see why the bank that is now over its reserve ratio (at 22%) would prefer to lend its excess to the first bank, rather than simply issue more loans to the public.
25. 
    Comment by khanacademy
    June 21st, 2009

    The private member …
    The private member banks get a 6% dividend on the equity capital (about $20b) that they contributed to the Fed. Since they (historically) get no interest on reserve deposits (about $800b), the member banks don’t make out too well from a yield point-of view ($1.2b/year on 820b with the fed). After this 6% is paid and the expenses of the Fed are paid, the rest of the money is returned to the treasury. Though it is officially private, the Fed is “owned” more by the government than by its members.