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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
Harrold, TX School Officials Right on Change in Campus Gun Policy, Says CCRKBA
Comtex
BELLEVUE, Wash., Aug 15, 2008 /PRNewswire-USNewswire via COMTEX/ ----Harrold, Tex. School district trustees and Supt. David Thweatt deserve accolades for changing school policy to allow staff and teachers to carry concealed handguns to protect against school shootings, the Citizens Committee for the Right to Keep and Bear Arms said today.
"When classes open August 25 in Harrold, school buildings will be safer than normal, thanks to this decision," said CCRKBA Chairman Alan Gottlieb. "Critics of the plan will argue about liability, or suggest that the school could have hired a security officer or off-duty policeman. But we all know that such officers can't be everywhere, and in an emergency, every second counts."
Gottlieb, co-author of America Fights Back: Armed Self-Defense in a Violent Age, noted that a full chapter of the book is devoted to the folly of gun free zones, including public schools. He said such places are magnets for cowardly mass killers who have nothing to fear because the victims cannot fight back.
"Gun control extremists despise this kind of common-sense approach to the potential of school violence," Gottlieb observed. "But the time has come to challenge their head-in-the-sand philosophy. How many lives have been lost on public school and college campuses because of these insane victim disarmament measures? How many students and teachers might be alive today if only lawmakers and school officials had acted as responsibly as the Harrold administration?"
Under this new policy, school employees who have a state-issued concealed carry permit, and permission from the school administration, may carry their guns on campus. They must be trained in crisis management and use ammunition designed to minimize ricochet inside school buildings.
"Allowing armed staff and teachers will provide a last line of defense if other security measures at the school fail," Gottlieb said. "No doubt the school board and Mr. Thweatt will suffer some slings and arrows, but if this decision one day saves the life of even one child, it will have been worthwhile."
With more than 650,000 members and supporters nationwide, the Citizens Committee for the Right to Keep and Bear Arms (www.ccrkba.org) is one of the nation's premier gun rights organizations. As a non-profit organization, the Citizens Committee is dedicated to preserving firearms freedoms through active lobbying of elected officials and facilitating grass-roots organization of gun rights activists in local communities throughout the United States.
SOURCE Citizens Committee for the Right to Keep and Bear Arms
http://www.ccrkba.org
Copyright (C) 2008 PR Newswire. All rights reserved
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