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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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Friday, August 15, 2008
Dallas Regional Chamber Calls for Momentum Dallas Entries
Comtex
DALLAS, Aug 15, 2008 /PRNewswire-USNewswire via COMTEX/ ----The Dallas Regional Chamber is accepting nominations through September 12, 2008 for the sixth annual Momentum Awards. The Momentum Awards celebrate companies that have made a positive impact on the economy through job growth and relocation and expansion activities. The award also honors companies that contribute to the vitality of the Dallas/Fort Worth region. Holmes Murphy Texas is the title sponsor of the event.
Awards will be presented at an invitation-only reception Thursday, October 30, at the Hotel Crescent Court.
Award Categories include:
Local Employment Growth -- recognizing local companies experiencing growth in regional employment measured by total jobs or percentage
National Employment Growth -- recognizing local companies experiencing growth in national employment measured by total jobs or percentage
Corporate Location -- recognizing a major corporate move or expansion to the region
Community Investor -- recognizing a major investment that generates positive economic impact
Community Catalyst -- recognizing a major project or investment that causes additional growth and positive economic change
Workforce Catalyst -- recognizing a company or organization that strengthens and prepares the workforce
Technology Catalyst -- recognizing a company or organization developing new technology that yields economic growth.
Awards will be based on activity June 1, 2007 - July 31, 2008. Businesses may self-nominate or be nominated by an outside individual or entity. Membership in the Dallas Regional Chamber is not required to apply. The deadline for completed applications is Friday, September 12. Applications may be downloaded from www.dallaschamber.org/ecodev.
Past recipients include: Comerica Bank, Victory Park, The Allen Group, Fidelity Investments, and Fluor Corporation.
For more information or to receive an application packet, please contact Kimberly Sims at 214-746-6728, ksims@dallaschamber.org or visit the Dallas Regional Chamber website www.dallaschamber.org.
ABOUT THE DALLAS REGIONAL CHAMBER
The Dallas Regional Chamber proudly supports economic development in the Dallas-Fort Worth region. Through the Chamber's leadership efforts, it has been integrally involved in corporate relocation and expansion projects creating increased commercial development and significant job growth to the DFW Metroplex. The Chamber maintains relationships with more than 75 key local community allies throughout the region.
ABOUT HOLMES MURPHY
Holmes Murphy & Associates is a premier, independent consulting and brokerage firm. Headquartered in Des Moines, Iowa, Holmes Murphy has more than 400 associates in major offices strategically located throughout the Midwest and Southwest. With over 70 associates in Dallas, Holmes Murphy provides industry-leading expertise in employee benefits, financial services, and risk management.
Media Contact: Sharon Venable
Contact Number: 214-712-1933
SOURCE Dallas Regional Chamber
http://www.dallaschamber.org
Copyright (C) 2008 PR Newswire. All rights reserved
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