Introduction to Fed Funds Explanation

I planned to write an explanation of Fed Funds for today’s post. I intended to address some of the misstatements and errors that I hear and read about Fed Funds and the Fed Funds Rate. While researching, I discovered that the erroneous and confusing statements about Fed Funds are so numerous that I could not cover them in a single article or even a series of articles.

I will list some of these errors below; then I will write individual posts later.

The subject of The Federal Reserve and Fed Funds has a lot of significance, but I cannot keep my posts short. I don’t want to bore my readers.


Here is a partial list of topics I plan to address:

  • Dollars Flow from Fed to Banks“- A misleading statement.
  • The Fed provides liquidity“- A misleading statement.
  • The Fed Raise Rates“- It does not and cannot.
  • The Fed Funds Rate is Important“-Not as important as in the past.
  • The Fed Buys U.S. Bonds” – A misleading statement.
  • The Fed Makes Money” – No, it does not.
  • And more as needed…


Although important, many people do not clearly understand the role and function of The Fed.

Misunderstanding the role and function of the Fed causes people to make decisions based on false premises.

One thought on “Introduction to Fed Funds Explanation

  1. I’m glad that you keep your articles short. It makes it more likely that I will contemplate the points you raise in them. I am interested in reading your descriptions about the Fed Funds and why this topic is so misunderstood.

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