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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 / Industrials
Friday, May 09, 2008
Orrin Hatch Helps Raser Technologies Break Ground for Utah Geothermal Power Project
Comtex
PROVO, Utah, May 09, 2008 (BUSINESS WIRE) ----Raser Technologies, Inc. (NYSE Arca: RZ) announced today that they held a groundbreaking ceremony for beginning the construction phase of the first geothermal power plant built in Utah in 20 years. Senator Orrin Hatch participated in the groundbreaking ceremony in Beaver County, Utah, along with many other state and county government officials. The planned geothermal power plant is anticipated to produce up to 11 megawatts (MW) of clean renewable energy this year.
Commenting at the groundbreaking ceremony, Senator Hatch said, "Today marks a turning point in our energy future. I believe geothermal power will play an increasingly significant role in our nation's renewable energy plan. New geothermal technology, combined with Raser's innovative development strategy, can unlock this nation's vast reserves of geothermal power. If our goal is to reduce greenhouse gases, then increasing our renewable energy production is a must. Utah has one of our nation's largest geothermal resources, and I'm pleased Raser is setting the pattern for our future with today's groundbreaking."
Jason Perry, Executive Director, Utah Governor's Office of Economic Development, also discussed Utah's efforts to increase the amount of renewable power produced and used in Utah. Mr. Perry said, "As one of the leading economies in the country and a progressive energy producing state, Utah is proud to be on the forefront of new cutting-edge technologies such as is being demonstrated today with this geothermal power plant."
Dianne Nielson, Energy Advisor to the Governor, also spoke at the groundbreaking and said, "Renewable energy is a key component in helping to grow Utah's economy. By developing Utah's vast geothermal resources using new technology, Raser is helping to create an important new renewable energy industry in Utah. This type of clean renewable power is ideally suited to meet our needs for a diverse energy supply. At the same time, we are making our own renewable resources much more economically competitive. Most importantly, by developing low impact resources like geothermal, we not only protect our beautiful environment here in Utah, but we help revitalize our rural economies as well."
"Today we have attained another milestone toward our goal of generating clean renewable electricity from the earth's substantial geothermal resources, which will reduce carbon emissions and produce healthier air for homes and families," said Brent Cook, Raser's Chief Executive Officer. "We are grateful for the support and service of Senator Hatch and the State of Utah. We will continue to endeavor to exceed our goals and meet the growing demand for clean renewable energy."
About Raser Technologies
Raser (NYSE Arca: RZ) is a publicly traded, environmentally focused technology licensing and development company operating in two business segments. Raser's Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology and Raser's Symetron(TM) technology developed internally by its Transportation and Industrial Technology segment. Raser's Transportation and Industrial Technology segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser's award-winning Symetron(TM) technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications. Further information on Raser may be found at: www.rasertech.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ, including, without limitation, the risks identified in our quarterly report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission, and all subsequent filings.
All forward-looking statements in this press release are based on information available to us as of the date hereof, and we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.
SOURCE: Raser Technologies, Inc.
Raser Technologies, Inc., Provo Richard Putnam, 801-765-1200 investorrelations@rasertech.com or Hayden Communications, Inc. Cameron Donahue, 651-653-1854 cameron@haydenir.com
Copyright Business Wire 2008
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