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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
DataSource, Inc. Announces New Partnership With DealerTrack Arkona
Comtex
KANSAS CITY, Mo., Aug 15, 2008 (BUSINESS WIRE) ----DataSource, Inc., one of America's largest print management suppliers to several major industries including top national new car dealership groups such as Van Tuyl Auto Group, Park Place Auto Group and Allen Samuels announced today a new partnership with DealerTrack Arkona, a leading supplier of fully integrated business management solutions for the automotive retail industry.
Data Source's president, David Holland, said the new deal supports their strategic objectives for growth within the automotive industry. "DealerTrack Arkona's top-notch client base combined with our high standards of product quality will bring new opportunities, build stronger client relationships in the market and achieve our growth objective."
The partnership between DataSource and DealerTrack Arkona will benefit dealers with new features such as consolidated invoicing and expanded solutions that include a picture-based catalog system for on-line orders. The new deal will enable DataSource to consistently deliver office supplies on-time and as needed without impacting their cost.
DealerTrack Arkona DMS has experienced tremendous growth over the last 10 years and was the first to provide automotive dealers with a web-based dealer management system (DMS). The innovative system automates many aspects of a dealership's operations including finance and insurance; parts, service, accounting and back office functions including payroll and sales management.
About DealerTrack (www.dealertrack.com)
DealerTrack Holdings, Inc. (Nasdaq:TRAK) is a leading provider of on-demand software and data solutions for the U.S. automotive and related industries. The company's solutions enable dealers to receive consumer leads, submit credit applications and receive responses, compare financing and leasing options, sell insurance, accessories and other aftermarket products, document compliance, and execute financing contracts electronically. In addition, the DealerTrack Arkona DMS (dealer management system) is used by dealerships nationwide. Over 22,000 dealers, including more than 90% of all franchised dealers; over 500 financing sources; and other service and information providers are active in the DealerTrack network.
About DataSource
DataSource, based in Kansas City, MO, provides a total solution to document design and distribution services essential to the successful operation of multi-location businesses such as commercial franchises, auto dealerships, retail insurance, branded products, industrial products and restaurant concepts. Services include design, sourcing, warehousing, fulfillment, distribution, print-on-demand and print management of marketing materials business forms and supplies. Products include business forms, marketing supplies, personnel management packets, training materials, menus, point-of-purchase displays and ad specialty items. DataSource manages over 15,000 SKUs for customers in 71,000 locations worldwide. Visit DataSource at www.data-source.com.
SOURCE: DataSource, Inc.
Spotlight Communications Julie Kuenstle, 281-745-1209
Copyright Business Wire 2008
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