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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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Monday, July 07, 2008
Groups Tell EPA to Stop Widespread Uses of Anti-Bacterial Consumer Chemical Product
Comtex
WASHINGTON, July 7, 2008 /PRNewswire-USNewswire via COMTEX/ ----In comments filed today with the Environmental Protection Agency on its new risk assessment and evaluation of the widely used anti-bacterial chemical triclosan, found in a wide range of products including soaps, toothpastes and personal care products, plastics, paints and clothing, public interest health and environmental groups point to health effects, environmental contamination and wildlife impacts and call for consumer uses to be halted.
The comments, submitted by Beyond Pesticides, Food and Water Watch, Greenpeace US, Natural Resources Defense Council, Sierra Club and dozens of public health and environmental groups from the U.S. and Canada, urge the agency to use its authority to cancel the non-medical uses of the antibacterial chemical triclosan, widely found in consumer products and shown to threaten health and the environment. Triclosan and its degradation products bioaccumulate in humans, is widely found in the nation's waterways, fish and aquatic organisms, and because of its proliferating uses, are linked to bacterial resistance, rendering triclosan and antibiotics ineffective for critical medical uses. The chemical and its degradates are also linked to endocrine disruption, cancer and dermal sensitization.
The non-medical uses of triclosan are frivolous and dangerous, creating serious direct health and environmental hazards and long-term health problems associated with the creation of resistant strains of bacteria, said Jay Feldman, executive director of Beyond Pesticides. The American Medical Association (AMA) is on record questioning the efficacy of triclosan in consumer products, raising the question of whether the consumer uses are necessary and are doing more harm than good. The coalition of groups commenting today, in addition to the hazards cited, criticizes EPA for not completing an analysis of the impact of triclosan on endangered species and other deficiencies in its review.
The EPA's public comment period for the reevaluation of triclosan, known as the reregistration eligibility decision (RED), closes today. The document releases EPA's risk assessment and its decision to allow triclosan's uses to continue and expand. EPA shares responsibility for regulating triclosan with the Food and Drug Administration (FDA). EPA has jurisdiction over treated textiles, paints and plastics and FDA is responsible for soaps, toothpaste, deodorants and antiseptics. The RED, however, is intended to assess the potential adverse effects across all uses.
In separate comments today, water utilities commented that triclosan and its degradation products are not cleaned out of the water treatment process and end up in sewage sludge, often referred to as biosolids. Research shows that earthworms take in triclosan residues, as do fish and aquatic organisms. Concerns have also been raised about residues in drinking water.
SOURCE Beyond Pesticides
http://www.beyondpesticides.org
Copyright (C) 2008 PR Newswire. All rights reserved
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