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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
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Monday, June 09, 2008
Beijing Mobs in the U.S.
Comtex
WASHINGTON, June 9, 2008 /PRNewswire via COMTEX/ ----Lance Corporal John Lee Caldwell, 26, came home to New York from North Carolina's Second Marine Division after hearing his mom, Ms. Judy Chen, was attacked for her belief in Falun Gong. Ms. Chen had been beaten and threatened with death by a pro-communist mob during organized violent attacks against Falun Gong practitioners in Flushing, Queens, New York on May 20.
"I'm home on leave for about ten days just trying to see what happened," said Caldwell, who plans to leave soon for his second tour in Iraq.
Ms. Chen, accompanied by her son Lance Corporal John Lee Caldwell, along with other victimized American Falun Gong Practitioners, volunteer workers for the "Quit the CCP (Chinese Communist Party) Service Center," representative from WOIPFG, and human rights attorney, will be present and speak at this event. Chen is just one of many Falun Gong victims in Flushing. Dozens more have received similar threats and attacks, and many have reported being pummeled with stones, eggs, and plastic beverage containers. The on-going incidents for the last three weeks are paralleled by happenings in Los Angeles, Chicago, Hong Kong, Japan, Poland and possibly elsewhere during the same period.
Pro-communist mobs numbering as many as 600 have been a consistent presence in Flushing, New York, since May 17th when they first began intimidating Falun Gong adherents. The attacks on Falun Gong have frequently escalated to violence, and at least seven instigators have been arrested on charges of assault by New York police. The attacks are believed to have been orchestrated by the Chinese Consulate in New York City, as revealed by a telephone recording with Mr. Keyu Peng, the Chinese Consul General, in which he boasts of his involvement.
The incidents in New York City are part of a larger pattern of coercive intimidation used by Beijing's United Front Work Organization, which is charged with the mission of isolating and destroying dissenting voices on foreign soil -- even in the U.S. The ramifications were apparent enough by 2004 as to prompt House Congressional Resolution 304, calling for Beijing to cease its intimidation of Falun Gong adherents on U.S. soil.
PRC officials continue to defy the congressional resolution, however, even as the Beijing summer Olympics approach.
This Forum/Press Event will continue to explore the truth and implications of Beijing's hate crimes, exporting terrorism, and infiltration on American soil.
For more information and breaking news, please visit: http://en.epochtimes.com/211,160,,1.html
SOURCE Epoch Times; WOIPFG
http://en.epochtimes.com/211,160,,1.html
Copyright (C) 2008 PR Newswire. All rights reserved
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