Impact of the Federal Funds Rate Popular Misconception If you start asking questions about federal funds in the federal funds rate, the response you receive will read something like the following: “The federal funds rate is one of the most important interest rates in the U.S. economy. That's because it impacts monetary and financial conditions, … Continue reading Fed Funds Explained No. 5
Month: July 2023
The Response to Coronavirus
The coronavirus has not caused lost jobs, closed businesses, restricted air travel, and many other adverse economic effects. Responses to the coronavirus have caused these effects. Were those responses appropriate? We may never know. Responses due to market intervention have been substantially different than they would have occurred in a free market. Introduction It will … Continue reading The Response to Coronavirus
Fed Funds Explained No. 4
Does The Fed Provide Liquidity? You may have heard people say that The Federal Reserve provides “liquidity” to the banking system. Does it really? I will give you just a few facts about The Fed and its Open Market Operations in this article. In this limited space, I cannot answer this very complex question definitively, … Continue reading Fed Funds Explained No. 4
Announcement
In order to perform maintenance on my production system I will not publish any articles until July 19. I hope the changes will help me publish on a more timely basis. See you next week. Jim Berger, Publisher
Trade Deficits, An Introduction
When President Trump threatened to impose tariffs on steel and aluminum, it triggered a blizzard of articles for and against the proposal. Instead of parroting what others have said — mostly empirical evidence- I want to give you the tools to understand the issue behind the proposed tariffs: “trade deficits.” Definition To discuss the issue … Continue reading Trade Deficits, An Introduction
Federal Finance Made Easy
It never ceases to amaze me how people seem to misinterpret what happens in the process of federal finance. At the head of the list stands this ridiculous economic stimulus program that the government has adopted. The chatter about the federal deficit probably stands second in line. To provide a basis for conversations about these … Continue reading Federal Finance Made Easy
Fed Funds Explained No. 3
Banks Replace Gold and Introduce Fractional Reserves This post tells a short tale of how banks take ownership of gold (a money commodity) and replace it with notes and checking accounts used as money. Eventually, they create more checking account money than they have gold, creating “fractional reserve banking.” New Account In a time before … Continue reading Fed Funds Explained No. 3