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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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Saturday, June 07, 2008
Clinton vs. Obama
Comtex
WASHINGTON, June 7, 2008 /PRNewswire-USNewswire via COMTEX/ ----
A SAMPLING OF CLINTON ATTACKS ON OBAMA
Sen. Clinton Attacked Obama's Character And Judgment:
Sen. Clinton Attacked Obama For Working For "Rezko, In His Slum Landlord Business." Sen. Clinton: "And I was fighting against those ideas when you were practicing law and representing your contributor, Rezko, in his slum landlord business in inner-city Chicago." (Sen. Hillary Clinton, CNN Democrat Presidential Debate, Myrtle Beach, SC, 1/21/08)
-- NOTE: On Wednesday, Rezko Was Convicted On Charges Of Fraud And Corruption. "A federal jury Wednesday convicted developer Antoin 'Tony' Rezko of corruption charges for trading on his clout..." (Bob Secter and Jeff Coen, "Rezko Convicted Of Corruption," Chicago Tribune, 6/4/08)
Sen. Clinton Called Obama's "Bitter" Comments "Elitist," "Out Of Touch" And "Not Reflective Of The Values And Beliefs Of Americans." Sen. Clinton: "Now, like some of you may have been, I was taken aback by the demeaning remarks Senator Obama made about people in small town America. Senator Obama's remarks are elitist and they are out of touch. They are not reflective of the values and beliefs of Americans." (Hillary Clinton For President, "Gov. Tom Vilsack, PA Mayors Respond To Senator Obama's Recent Characterizations Of Pennsylvanians," Press Release, 4/12/08)
Sen. Clinton Attacked Obama's Readiness To Serve As Commander In Chief:
Sen. Hillary Clinton (D-NY) Said That While She And Sen. John McCain (R- AZ) Had Crossed "The Commander In Chief Threshold ... You Will Have To Ask Senator Obama With Respect To His Candidacy." Sen. Clinton: "In this election we need a nominee who can pass the commander-in-chief test. Someone ready on day it defend our country and keep our families safe. We need a president who passes that test. The first and most solemn duty of the president of the United States is to protect and defend our nation. And when there is a crisis and when the phone rings whether it's 3:00 p.m. or 3:00 a.m. In the White House, there is no time for speeches and on the job training. Senator McCain will bring a time of experience to the campaign. I will bring a lifetime of experience and Senator Obama will bring a speech he gave in 2002. I think that is a significant difference. I think since we now know Senator McCain will be the nominee for the party, national security will be front and center in this election. We all know that. I think it's imperative that each of us be able to demonstrate we can cross the commander in chief threshold. I believe that I have done that and certainly Senator McCain has done that. You will have to ask Senator Obama with respect to his candidacy." (CNN's, "Newsroom," 3/8/08)
Sen. Clinton Mocked Obama For Arguing That "Living In A Foreign Country At The Age Of 10 Prepares One To Face The Big, Complex International Challenges The Next President Will Face." Sen. Clinton: "Now voters will judge whether living in a foreign country at the age of 10 prepares one to face the big, complex international challenges the next president will face. I think we need a president with more experience than that." (MSNBC's, "Hardball," 11/21/07)
Sen. Clinton Attacked Obama's Policies:
Sen. Clinton Attacked Obama's "Continuing To Say That He Would Meet With Some Of The Worst Dictators In The World Without Preconditions." Sen. Clinton: "And I disagree with his continuing to say that he would meet with some of the worst dictators in the world without preconditions and without the real, you know, understanding of what we would get from it." (Sen. Hillary Clinton, NBC Democrat Presidential Debate, Cleveland, OH, 2/26/08)
Sen. Clinton Accused Obama Of Wanting "A $1 Trillion Tax Increase." Sen. Clinton: "I do not want to fix the problems of Social Security on the backs of middle-class families and seniors. If you lift the cap completely, that is a $1 trillion tax increase. I don't think we need to do that." (Sen. Hillary Clinton, CNN Democrat Presidential Debate, Las Vegas, NV, 11/15/07)
Sen. Clinton Said Obama's Health Care Plan "Simply Flunks The Test." Sen. Clinton: "Sen. Obama's plan does not and cannot cover all Americans. He's called his plan universal, then he called it virtually universal, but it is not either. And when it comes to truth in labeling, it simply flunks the test." (Sen. Hillary Clinton, Remarks On Health Care, Des Moines, IA, 11/28/07)
A SAMPLING OF OBAMA ATTACKS ON CLINTON
Obama Attacked Sen. Clinton's Integrity:
Obama Accused Sen. Clinton Of "Willing To Say Anything To Get A Political Or Tactical Advantage," Eroding "People's Trust In Government" And Being Part Of The "Perpetual Campaign That ... Keeps Us From Solving Problems." Obama: "If you get the kind of looseness with the facts that Senator Clinton's displayed and you're willing to say anything to get a political or tactical advantage - that erodes people's trust in government. ... It makes them cynical. It's part of the perpetual campaign that is how Washington all too often operates these days and it keeps us from solving problems." (Mike Dorning, "Obama: Clintons Will 'Say Anything' For Political Advantage," Chicago Tribune's "The Swamp" Blog, www.swamppolitics.com, 1/22/08)
Obama Accused Sen. Clinton Of "Changing Positions Whenever It's Politically Convenient," Including On Free Trade, Torture, And The War In Iraq. Obama: "I think it requires us to be honest about the challenges that we face. It does not mean, I think, changing positions whenever it's politically convenient. And Senator Clinton, in her campaign, I think has been for NAFTA previously. Now she's against it. She has taken one position on torture several months ago, and then most recently has taken a different position. She voted for a war, to authorize sending troops into Iraq, and then later said this was a war for diplomacy. I don't think that it - now, that may be politically savvy, but I don't think that it offers the clear contrast that we need. I think what we need right now is honesty with the American people about where we would take the country." (Sen. Barack Obama, MSNBC Democrat Presidential Candidate Debate, Philadelphia, PA, 10/30/07)
Obama Attacked Sen. Clinton For Serving As "A Corporate Lawyer Sitting On The Board Of Wal-Mart." Obama: "[W]hile I was working on those streets, watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board of Wal-Mart." (Sen. Barack Obama, CNN Democrat Presidential Candidate Debate, Myrtle Beach, SC, 1/22/08)
Obama Attacked Sen. Clinton's Experience:
Obama Ridiculed Sen. Clinton's Claims To Experience, Saying They Amount To "Osmosis, As A Consequence Of Having Been First Lady." Obama: "Sen. Clinton keeps touting her experience, but has no management experience that I can see in her resume. It's presumed through osmosis, as a consequence of having been first lady." (Carla Marinucci, "Barack Obama, In S.F., Takes On The Clintons," San Francisco Chronicle, 1/18/07)
Obama: "My Understanding Was That She Wasn't Treasury Secretary In The Clinton Administration." (CNN's, "American Morning," 11/20/07)
Obama Attacked Sen. Clinton's Secrecy:
Obama Attacked Sen. Clinton For Her Husband's Failure To Release Records From His Presidential Library, Declaring "She Can Release These Papers. She Can Get Them Released Soon..." Obama: "When she suggested somehow she didn't have control over whether or not these papers were being released--when what we're talking about here is her husband's presidential library. And when she is making a suggestion that part of the experience that she brings to this office is her experience as First Lady, then, I think, people have a right to ask some tough questions. She can release these papers. She can get them released soon, before the primary season is up. Certainly she doesn't have to wait until 2012 to have them released." ("'What She Can't Do Is Have It Both Ways,'" Newsweek.com, 11/12/07)
(Logo: http://www.newscom.com/cgi-bin/prnh/20080519/RNCLOGO )
SOURCE Republican National Committee
http://www.gop.com
Copyright (C) 2008 PR Newswire. All rights reserved
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