People who care about financial markets have speculated about the effects of the Fed “raising” the Fed funds rate. Would it cause the stock market to decline? Would the economy return to recession? Would mortgage rates start to rise and kill the housing recovery? A person does not need a plethora of charts and graphs … Continue reading Who Cares About Fed Funds Rate
Category: Money and Banking
Banking, the systems that holds money accounts, manages money transactions and facilitate the effective transfer of money between market actors. Banking also plays the primary role in the creation of artificial money.
Banks also buy notes from customers (still referred to as lending, but banks have nothing to lend.)
Questioning Assumptions about The Federal Reserve (Summary)
Previous Post: Time to Rethink Beginning of Series: Part I Learning Loops and Examining Assumptions History is littered with examples of people operating based on flawed assumptions. Fortunately, there is also a history of people challenging those assumptions. Operating using flawed assumptions over and over again can be referred to as single-loop learning. To challenge … Continue reading Questioning Assumptions about The Federal Reserve (Summary)
Bank Bail Out or Deposit Accounts Rescue?
For the Federal Government to guarantee all bank deposits does not amount to bank bailouts. It protects those who have claims on (U.S.) money dollars, but it does not protect bank shareholders. It simply makes an implicit guarantee explicitly. In what people call a bank "bailout," shareholders are not made whole. With a business bailout, … Continue reading Bank Bail Out or Deposit Accounts Rescue?
Questioning Assumptions about The Federal Reserve (Part IV)
Previous Post: Second Loop Beginning of Series: Beginning Time to Rethink Fed Assumptions? Introduction Imprecise language can work when we agree on the true meaning. We still refer to sunrise and sunset, even though we nearly all know it does not work that way. But do we understand the operation of the Fed so well … Continue reading Questioning Assumptions about The Federal Reserve (Part IV)
Questioning Assumptions about The Federal Reserve (Part III)
Previous in Series: First Loop Beginning of Series: Beginning A Second Loop - New Assumptions About the Fed The recent explosion in price inflation has caused many commentators to ask, "When will the Fed act to tame this inflation?" "When will the Fed raise interest rates?" In response to the price inflation, the Fed has … Continue reading Questioning Assumptions about The Federal Reserve (Part III)
Questioning Assumptions about The Federal Reserve (Part II)
First of Series: Learning Loops The First Loop - Some Background on the Fed Because of the current inflation problem, it may be time to examine widely held assumptions about the Fed and its influence on the money supply and interest rates. To examine some of these assumptions, I need to explain a few things … Continue reading Questioning Assumptions about The Federal Reserve (Part II)
Questioning Assumptions about The Federal Reserve (Part I)
Learning Loops and Flawed Assumptions Congress formed the Federal Reserve System roughly 110 years ago. Over that period of time The Fed has undergone numerous changes in policy and operation, yet popular assumptions about The Fed have lagged behind those changes. Since Fed watchers and commentators place a high level of importance on the actions … Continue reading Questioning Assumptions about The Federal Reserve (Part I)
The Fraud Known as Banking
I compare people's understanding of the money & banking system to computer manuals. The rate of change for computer programs has gotten so rapid that the manuals (even the digital manuals) cannot keep up. People's mental models of the banking system also have not kept up. Part of what they believe harkens back to when … Continue reading The Fraud Known as Banking
Searching for a Logical Man Who Understands Money
Somewhat similar to Diogenes, I search for a logical man. I want to find someone who can answer a few simple questions about Money and The Federal Reserve. Can The Fed Raise Rates? I hear and read a lot of pronouncements about how The Federal Reserve will raise rates and increase or reduce the money … Continue reading Searching for a Logical Man Who Understands Money