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Federal Funds Rate

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.

Home / Personal Finance / On Topic / Health Care

Analysis

Boomers in Pain Look Beyond Traditional Cures

 
Dunstan Prial
FOXBusiness
 

Baby boomers dealing with chronic pain face a number of tough choices.

They can tone down their active lifestyles, but that sort of flies in the face of the baby boomer aesthetic. They can tough it out on aspirin and ice wraps, but that only works for so long. 

Eventually, most turn to traditional medicine, with its endless paperwork, harried doctors and powerful prescription drugs (and their equally power side effects).

Angela Harris, a 48-year-old real estate broker from New Jersey and avid tennis player, had tried all of the above for her back pain before turning to alternative -- or complementary – forms of treatment. In her case, regular acupuncture sessions at a small, storefront clinic on Canal Street in Manhattan’s Chinatown.

“It helps and I find the entire experience relaxing,” she said one recent afternoon following a 30-minute session. “It’s entirely different than the doctor’s office, where he’s always in a hurry, and then I’m usually told to refill my prescriptions.”

Harris represents millions of baby boomers who, having grown frustrated with the limitations of the traditional health care system, have expanded their options and sought relief from acupuncturists, chiropractors, massage and aroma therapists, and energy healers, among others.

Joseph Grzywacz, an associate professor in the department of family and community medicine at Wake Forest University School of Medicine, said studies have revealed most baby boomers use alternative healing to complement rather than supplant conventional methods.

Complementary and Alternative Medicine

Maxibustion

The burning of the herb moxa or near the skin at vital points to optimize energy flow

Magnetic Therapy

The application of static magnets to areas of pain or inflamed blood vessels

Reflexology

The application of pressure to points on the feet and/or hands with the intent of healing other areas of the body

Biofeedback

The use of electronic devices to help people learn to control normally reflexive bodily functions like breathing or heart rate to promote relaxation

Reiki

Practitioners seek to heal the spirit by placing their hands on a body to transmit universal energy

Ayurveda

The use of herbal treatment, massage, and yoga to integrate the mind, body and spirit 

Source: National Center for Complementary and Alternative Medicine

In other words, if the pain persists after several trips to the doctor and a few months of physical therapy, baby boomers have availed themselves of the myriad treatments that have gained traction in Western countries in recent decades after serving as staples of Eastern medicine for centuries.

“We think complementary medicines are simply one component of the overall approach people use to manage their health,” said Grzywacz.

Click here to read more and watch a demonstration of reiki

While acupuncturists and chiropractors have been busy for years, recently energy healers who practice lesser-known treatments such as Reike and Shamballa have also seen a surge in business.

Grzywacz cited a couple of practical explanations for the growth in popularity of alternative treatments.

First, their acceptance in Western culture coincided with the period during which baby boomers came of age in the U.S. Prior to the 1960s and 1970s, when baby boomers were reaching adulthood and alternative healing methods were gaining mainstream attention, these treatments were not widely available to consumers.

Second, baby boomers – sometimes referred to as the "Me Generation" and often identified with hippy or at least New Age aesthetics – are more open than previous generations to seemingly unconventional forms of medicine.

A downside to the trend toward alternative health care is that, since most of the practices aren't recognized by U.S. health officials, insurance doesn't cover the costs. Consequently, alternative medicine consumers are mostly higher income, a point not lost on researchers.

Nevertheless, consider the markedly different experiences afforded to patients seeking treatment for their chronic pain. 

A 50-something, desk-bound baby boomer gradually injures his back skiing, playing basketball, doing yard work and generally maintaining the active lifestyle coveted by his generation. He suffers silently and downs aspirin for a few weeks, but the pain remains.

Finally, he calls his doctor and gets an appointment (probably not for another week or so.) Then, after donning a flimsy robe, the patient waits a half-hour alone in a treatment room. The doctor arrives, only to rush back out a moment later to attend to another patient. Eventually, the physician prescribes some pain killers and suggests physical therapy.

Hardly an atypical experience for baby boomers suffering chronic pain – chronic meaning the kind that doesn’t quickly go away.

That being the case, the patient still in pain, is likely to seek alternative forms of treatment that offer a different experience -- and at least as much likelihood of providing some relief.

That’s where providers like Dorothy Wong step in. Wong is a licensed acupuncturist and board certified herbalist with offices in Manhattan and New Hyde Park, N.Y.

At the tidy, gleaming white storefront on Division Street in the heart of Manhattan’s Chinatown, where Wong and her father Dr. Chi Wai Wong administer an array of alternative therapies, clients are led past shelves stocked with herbal remedies to a series of cozy booths in the rear.

Soothed by a soundtrack of wind chimes and ethereal Eastern music, patients can opt for acupuncture, massage therapy, or the ancient practice of cupping, in which warm glass cups are applied to the skin to draw moisture out of the body and promoting circulation.

While chiropractors receive the lions share of the alternative consumers, Dorothy Wong said acupuncture is also extremely popular among the 40 to 60-year-old baby boomer set.

 Many of her clients have already tried Western treatments, be it surgery, physical therapy or prescription pain killers, she said. But they return to her again and again for the personal attention and the natural experience.

“What they’ve found is that they have a lot of adverse reactions to (traditional) treatments, especially the pain killers,” she said. “They come to us seeking physical comfort. They enjoy that it’s a hands-on experience and they feel better when they leave.”                 

           

 
 

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