What does it actually mean when the Fed "lowers interest rates"?What exactly is that binding on? Tons of things have interest rates above or below the "fed interest rate". Who specifically has to follow what the Fed sets and how does it affect all other rates if at all?
>>61118648fed sets the risk free rate so everyone else adjusts.
Zoomer get all the trade off from policy change while boomer get massively rewarded by being status quo
>>61118648Banks borrow money from the fed. Their borrowing interest rate is lowered when rates are cut, which means they can borrow more. Banks borrow at a lower rate = they can also loan at a lower rate = people can get lower-rate loans to try that food truck startup they always wanted.That's what it's supposed to mean, at least.
>>61118648no one has to "follow" the fed, but they do in a sense as they will lower/raise their rates to match their competitors to stay competitive. The fed is just a bank for banks, where banks can bank. When the fed sets a borrowing rate, the banks will then borrow the money they borrowed from the fed at a slightly higher rate so that they can profit.Wells Fargo could decide to set their borrowing rates way higher than the fed's rate, like 50% or something like that, but then no one would bank with them because they could go to another bank offering a way better deal. The Fed rate acts as a minimum that it wouldn't make sense for banks to set their borrowing rates below, but they dare not set their rates much higher either lest another bank undercuts them
I also heard it might affect something like the overnight rate that banks lend each other money at?
>>61118648The fed only controls the overnight lending rate. Banks can set their rates at any rate they want. In a healthy market, those rates compete down and get close to the fed's overnight rate. In a bogged dying market, you get huge disconnects and even see long term bond rates go lower than short term rates. That's a sign your system is dying and will rollover debt re-financing faster and faster until it snaps. At the rate it's going, it will be around 5 years or less.
I had that backwards. The bond yields on the long end go higher, which means there's no demand for the US bonds on the market, because there's no confidence in the dollar's stability. The US is using short term debt to finance itself more increasingly which is why the Trump admin is so desperate to lower rates. They think it will bring long end yields down and hopefully they can do a transfer from short to long, sort of like a credit card transfer balance but for a nation. It's so fucking stupid and I'm amazed it's gone on as long as it has.
>>61118648>What does it actually mean when the Fed "lowers interest rates"?1. THE JEWS are collecting free value, equal to the FED rate, from all the goyim, as we speak, forever and at perpetuum.2. The goyim become so poor they can't buy food or (((jew)))elery and they can't work so the economy does't produce enough juice to feed the FED3. The FED lowers rate, so the pressure on the goyim is lower, (((they))) can now borrow money cheaper so they hire they goyim, which then buys food and (((jew)))elery4. If the FED rate is 0, unlimited free money, just ask for it and it is given, but only to THE JEWS. They can hold it as long as they pay the interest, which is... 0!Last time the FED rate was cut, THE JEWS got the most of the stimmies, while goyim got a 6% share, which they promptly gambled away in crypto and stocks.
>>61118648this video will explain your the questions you might have about the topic anonhttps://www.youtube.com/watch?v=d0nERTFo-Sk&t=55
>>61118683>Banks borrow money from the fed.They don'tBanks print it
>>61119673>Banks print itThey have to pay the FED the funding rate on the printed money.
