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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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Wednesday, May 28, 2008
Environmental Hall of Fame Launches Annual Awards Ceremony in Los Angeles June 5 - June 7
Comtex
LOS ANGELES, May 28, 2008 /PRNewswire via COMTEX/ ----Recognizing the nation's top environmentalists and leading projects capable of reducing global warming, the Environmental Hall of Fame will launch a unique awards and recognition program on June 5, 6, and 7, 2008 at the Westin LAX, 5400 W. Century Boulevard, Los Angeles, from 7:00 PM to 9:30 PM.
This event will kickoff a series of ceremonies and induction into the Environmental Hall of Fame planned as the environmental sector's equivalent of an Emmy or Grammy Award.
The June 5 - 7 ceremonies will recognize 20 of the most outstanding organizations and individuals for their longstanding commitment to helping to create a green, sustainable planet and reduce global warming. Selected inductees at this ceremony are primarily from the Los Angeles region. Award recipients include Green Celebrities Mario Van Peebles and Van Jones. Each evening of the inaugural three-day event will offer a complete agenda, with participants encouraged to attend one or more evenings. The event will be recorded for national TV and internet distribution.
The mission of the Environmental Hall of Fame is to help implement the solutions of the top environmentalists to help reduce global warming. Inductees were selected following more than one year of full-time research into environmental projects by Catherine Corbin and Allen Rubin, authors of Environmental Heroes. Criteria included peer recommendations, longevity in the field and impact. Interviews and internet research resulted in a book, gallery exhibits, environmental museum and video, available in late 2008.
The Environmental Hall of Fame offers top environmentalists an even stronger platform to call attention to and implement environmental solutions.
Among others, attendees include: BJ Dohrmann, CEO Space; Environmental Defense Center of Santa Barbara; Felix Kramer, founder of Cal Cars; Guy Negre, The Air Car; Hunter Lovins, author; Larry Kazmerski, Director of NREL's National Center for Photovoltaics; Mario Van Peebles, actor and director; New Energy Congress; PacWind; Plug-In America; Plug-In Partners; Rainforest Action Network; Ron Freund, Electric Auto Association; Set America Free, USA Energy Independence; Southwest Windpower; Spectrolab (Boeing Company) Stan Ovshinsky, Father of Thin-Film Solar Energy; Tesla Motors; The Edward R Mercer Foundation; US Green Building Council, LA Chapter; Van Jones, renowned advocate.
Seating is limited. Tickets are available for each evening's events at $10 per person. For ticket information, visit http://awardsb.blogspot.com. Or, for more information, please email ajr108@lisco.com.
SOURCE Environmental Hall of Fame
http://awardsb.blogspot.com
Copyright (C) 2008 PR Newswire. All rights reserved
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