Forex & Tradings

The reason that the Federal Reserve to provide a mechanism to a lot of money in the economic system of control. Too much money into the system to inflate. Very little money on the outcome of the recession. If you imagine the economic system as one side of a seesaw, the functions of the Fed as a counterweight to the page. The Federal Reserve is a strange mixture of private banks with federal authority, but not really in control of the government. Works mostly out of sight to the flow of money between the very rich to keep the financial markets, banks and consumers, while responding to political pressure, both domestically and internationally. Which holds its meetings in private, making decisions affecting the economic well being of us all. Although the Fed has other tools that the process that gets the most attention concerns the interest rates banks can use, especially commercial banks. It can be a little confusing when the media announce the decisions of the Fed to change interest rates. These changes directly affect the rate of commercial banks. You may or may not affect consumers alike. This is how the process should work. If the Fed decides that there is too much money into the system, which pay interest rates of commercial banks to borrow money sets. If you decide that not enough money in the economy, lowering interest rates. The interest rate the Fed charges commercial banks has a direct impact on creating the amount of money to other banks in the whole economic system can. Let's say round numbers and that the Fed will increase the amount of money in the system. It reduces the interest rate so it is more favorable to commercial banks to borrow money. The Fed then lending one billion dollars in commercial banks at a lower interest rate. The commercial banks now have more money to lend to other banks, so that the loan of one billion dollars from the Fed of "savings", savings banks, savings banks and loan institutions, commercial banks and cooperative banks. For the loan of one billion dollars to other banks, commercial banks create five million dollars in the billions of U.S. central bank lent them. Sparkassen then the five million dollars and credit, the creation of who knows how many millions of dollars to circulate in the economic system. This process creates more money into the system. When the Fed wants to reduce the amount of money available, the process is running in the opposite direction. She raises interest rates to make it more expensive for commercial banks, money borrowed by reducing the amount of money that commercial banks lend loans to savings, which reduces the amount of money available to consumers. This is how this banking system is. The reason that the Federal Reserve will prevent the adjustment mechanisms to inflation and recession by controlling the flow of money. The current financial crisis is proof that the system is not as good as it is supposed to work. 209b