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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.
Home / Markets / Industries / Energy
Thursday, July 17, 2008
Greenbelt Resources Secures $12 Million Purchase Order
Comtex
MINNEAPOLIS, Jul 17, 2008 (BUSINESS WIRE) ----Diversified Ethanol, a subsidiary of Greenbelt Resources Corporation (Pink Sheets: GRCO) has negotiated additional ethanol plant design Purchase Orders. One of the first of these Purchase Orders is a $12 million construction project based in Dade City, Florida in conjunction with Diversified Ethanol's current California Client, Master Recycling. Under the current Purchase Order Diversified Ethanol has agreed to run and operate the facility for a period of minimum 12 months or as needed, while at the same time maintaining a 15% ownership of the facility. Master Recycling processes waste both in Pomona, California and in Dade City, Florida.
This "new style" ethanol plant generates ethanol from food waste as well as other post consumer waste. The plant's compact size allows Diversified Ethanol to add an innovative water filtration system. The water filtration technology is an extremely important process in achieving an improved ethanol conversion, faster Local, State and Federal plant permitting, and increased profitability. The smaller waste-based plant designs achieve significantly improved cash flow when compared to large corn-based ethanol plants.
Master Recycling, in conjunction with Diversified Ethanol, originally agreed that the first plant should be built in Pomona, California. Where Plant designs had already been 75% completed. However Diversified and Master recycling came to the conclusion that it would be best for both companies to have the first plant be built in Florida, due to increased construction cost and current market conditions. Master's recycling operation in Dade City, Florida offers far less permitting hurdles and requires lower capital requirements for completion. Their operation in Dade City, Florida has existing buildings and infrastructure needed for a quicker ethanol plant adaptation for their waste based feedstock. More information will be forthcoming as the project moves forward.
Diversified Ethanol's co-founder, Floyd Butterfield, an award-winning ethanol plant designer, was recently featured in a New York Times article regarding the design and marketing of home waste-based ethanol conversion units. Mr. Butterfield states, "I am very excited about our clean, earth friendly technology and even more excited about the cash-flow numbers I have seen." Mr. Butterfield believes that hundreds of small ethanol plants can be built nationwide.
This press release does not constitute an offer of any securities for sale. This press release contains certain forward-looking statements. These forward-looking statements involve certain risks & uncertainties that could cause actual results to differ, including, without limitation, the company's limited operating history & history of losses, the inability to successfully obtain further funding, the inability to raise capital on terms acceptable to the company, the inability to compete effectively in the marketplace, the inability to complete the proposed acquisition and such other risks that could cause the actual results to differ materially from those contained in the company's projections or forward-looking statements. All forward-looking statements in this press release are based on information available to the company as of the date hereof, and the company undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.
SOURCE: Greenbelt Resources Corporation
Greenbelt Resources Corporation Scott Pummill, 952-435-1933 www.greenbeltresources.com www.diversifiedethanol.com
Copyright Business Wire 2008
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