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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 / Personal Finance / Lifestyle & Money / Travel & Lifestyle
Monday, April 28, 2008
Game Plan
Finding and Giving Direction
Nancy Colasurdo, Life Coach
FOXBusiness
It often happens that, when I talk to people who are making a living doing what they love, there is a mystical quality to the story of what brought them there. Tracey Serebin’s is a case in point.
Some years ago, while visiting the Northeast from Florida to regroup and think about what she wanted to do next in her professional life, Serebin was in a sort of walking meditation when a car almost hit her. The driver rolled down the window and asked for directions. Serebin was startled, but had a moment of clarity.
“People were stopping me on the street all the time asking me for directions,” Serebin said in our recent interview. “This is when I said, ‘Tracey, there are people needing direction from you.’”
No need to ask
which people. That piece of the puzzle was a no-brainer: Serebin had, years before in Florida, taken a volunteer position
as a certified Guardian Ad Litem representing abused and neglected children in court. Professionally, she had been an entrepreneur
from age 19 and, by age 25, the president of a company that was the largest buyer of home furnishings accessories in the country.
But in all of her business success, it was her volunteer work with children that really made her tick.
Now fast forward
to that day when the car almost hit her.
“I need to give kids and families direction,” Serebin recalls saying to herself. “That’s what I need to do.”
So she founded A Child’s Voice, the New Jersey-based business platform from which she now works as a family dynamics and communications specialist through coaching, motivational speaking and writing. Everything she does is in keeping with her company tagline – “Building Stronger Families.” It has been seven years and the rewards have been plentiful.
“I like to nurture and empower kids,” Serebin said. “I’m helping them use their voice and they get that.”
For example, one of her more memorable clients was a 5-year-old named Erica who had such constant stomachaches that she was asking for Mylanta every morning. Her mother took her to several doctors and they couldn’t find anything physically wrong with her. Finally, a chiropractor recommended Serebin.
“They lived in New York City and since the age of two Erica had been curious about homeless people they would see on the street,” Serebin said. “She used to ask her mom questions. Why do they have nowhere to live? Where do they go? Her mom thought this was nice, but she brushed it under the rug.”
But Serebin drew out Erica and the little girl talked about wanting to build homes for the homeless and help them somehow. It was tearing her up, literally. So Serebin suggested she conduct a penny drive for the cause.
“She blossomed,” Serebin said. “She asked her teacher and walked up in front of the class and even began asking people on her block. She became extroverted. The mom was amazed. It improved their relationship. And the stomachaches went away.”
That case is particularly dear to Serebin because it is representative of her philosophy of focusing on the solution instead of the problem. Through her prior work as a Guardian Ad Litem, she learned to talk to a child, interview other people around the child, and write an objective report for the judge on the case. Now she is particularly drawn to issues where there is a clear breakdown in communication – i.e., poor grades, lack of focus, masking of problems with medication.
“I have told several parents, ‘Wean your child off the drugs. Find out who your child is without meds,’” Serebin said. “Sometimes the reason they can’t focus in school is because they’re gifted and need to be more challenged. Or they have a learning disability. Or there are bullying issues.”
Her interest was piqued by the recent case in Florida where a group of teen-aged girls lured a former friend to a house and then beat her up. They captured it all on video and it made its way around the Internet before YouTube.com removed it.
“You see these girls behaving this way, they obviously don’t know how to communicate,” Serebin said. “Kids today are all texting, emailing, breaking down words and sentences. They’re not problem solving by conversing.
“In a situation like this, they need to be punished. But that’s not going to solve the problem. They’ll come out of the punishment and still not know how to communicate.”
Serebin has had success working with teens and offers problem-solving worksheets in her curriculum. She likes that they’re old enough to pick up the life skills she teaches. Jackie, a teen-ager who was really struggling in high school, was brought to Serebin by her mother. Serebin spoke with her and soon realized school was simply not her strength.
“I thought it was best if we focused on her goals and what she would do after high school,” Serebin said. “I noticed that she cared about how she dressed and so I started talking to her about fashion. She really responded to that. No one had ever asked her what she wanted.”
Jackie started progressing and eventually landed an internship at Seventeen magazine. For Serebin, it was an example of a student whose learning style wasn’t in tune with the public school norm. Making Jackie’s mother aware of that was key. In an article about the case, Serebin wrote, “Being an evolved parent requires you to see past limitations that society tends to put in front of you. It requires looking for the positive when everyone else is focusing on the negative. It requires you to think outside the box and look down the road to the real world.”
Outside-the-box – dare I say mystical? – thinking can indeed clarify one’s life calling. Sometimes a car that almost hits you isn’t about the car.
Sometimes it’s about showing you direction.
Nancy Colasurdo is a practicing life coach and freelance writer. Her Web site is www.nancola.com. Please direct all questions/comments to FOXGamePlan@gmail.com.
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