Banking 14: Fed Funds Rate

Banking 14: Fed Funds Rate

How open marketplace operations outcome a rate during that banks lend to any alternative overnight.


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25 Responses to 'Banking 14: Fed Funds Rate'

  1. personova - December 29th, 2009 at 11:45 am

    Sal, think in terms of transactions, maintenance of accounts, being maintained by the FED. The banks lend what they want and the FED makes sure they have the appropriate reserves. Think of the FED as being full service. Hmm. Question, when are the reserve requirements verified? Every day? Every quarter? Over night?

  2. mrzack888 - December 29th, 2009 at 11:45 am

    so when the FED sell treasuries to China, it won’t affect the target rate for US since it is Chinese that are holding the treasuries. if the fed sells treasuies to US customers only, then it would cause a raise in the fed fund interest rate?

  3. hipbas - December 29th, 2009 at 11:45 am

    The Fed is privately owned.

    100% of its shareholders are private banks.
    There is a guaranteed 6% return to the banker shareholders. These stocks are different to private equity stocks and may not be sold or traded.

    The banks also get interest from the taxpayers on their “reserves” held at the FED.

    Taxpayers will be paying annual interest to the banks on at least $700 billion held in reserves.

    Banks retain these reserves to accumulate interest and then lend on ten times that sum in loans

  4. Myrkul1029 - December 29th, 2009 at 11:45 am

    and also the fed doesnt make any surplus, just enough money to keep itself going

  5. Myrkul1029 - December 29th, 2009 at 11:45 am

    because it needs some money to fund its expenses ( the ppl working there, the cost of printing money etc..), and the REST it gives back to the state. The goverment IS controling the wealth and money supply, and it needs an institution to do it, it’s only a question whether that institution is govement owned or private owned. And from what i understand although it is officialy stated that the fed private owned, it’s essentialy govement owned, because the goverment chooses it’s board of directors

  6. stefanobetty - December 29th, 2009 at 11:45 am

    Fed gets interests on money just printing them??? if Fed is own by the government ok, if Fed is privat…they are a tipografy and get interest on the nominal value of their prints…right?

  7. hipbas - December 29th, 2009 at 11:45 am

    Why does the Fed get interest on treasury securities (as assets on their book) when this interest “supposedly” goes back to the treasury as surplus. Isn’t this a redundant system? Why can’t the government just take over the role of the Fed and control the nations wealth and money supply? Central banks are powerful because they control interest rates which in turn control money supply leading to manipulated economic bubbles and busts and manipulation of the stock market. Abolish the Fed!!!

  8. trotskij4 - December 29th, 2009 at 11:45 am

    he actually ment fu..nds

  9. stonecold641 - December 29th, 2009 at 11:45 am

    he almost said fuck at 3.42

  10. bmlong137 - December 29th, 2009 at 11:45 am

    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….

  11. jackuy12345 - December 29th, 2009 at 11:45 am

    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

  12. jonald77 - December 29th, 2009 at 11:45 am

    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.

  13. jackuy12345 - December 29th, 2009 at 11:45 am

    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 fucking go on the news and tell all the ppl in wall street what they suppose to do then!! do something good besides talking shit with me right here, u r just a all talk fool

  14. jonald77 - December 29th, 2009 at 11:45 am

    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.

  15. jackuy12345 - December 29th, 2009 at 11:45 am

    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

  16. jonald77 - December 29th, 2009 at 11:45 am

    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?

  17. jackuy12345 - December 29th, 2009 at 11:45 am

    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

  18. jonald77 - December 29th, 2009 at 11:45 am

    u need to do some research on the banking system

  19. jackuy12345 - December 29th, 2009 at 11:45 am

    i dont think u have any idea of what u talking about

  20. mustardy - December 29th, 2009 at 11:45 am

    they didn’t give treasury money, they BOUGHT treasury notes on the open market

  21. FranceParisian - December 29th, 2009 at 11:45 am

    Hey thanks a lot, will definitely check it out. Very kind of you to share this site.

  22. jonald77 - December 29th, 2009 at 11:45 am

    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.

  23. FranceParisian - December 29th, 2009 at 11:45 am

    I guess this is incorrect! I need to research more on this and if I am wrong I would welcome correction

  24. FranceParisian - December 29th, 2009 at 11:45 am

    Hi Sal,

    What happens now to the world gold reserve? Who actually owns them now?

  25. carracer481 - December 29th, 2009 at 11:45 am

    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.


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