David7204 wrote...
The Federal Funds Rate is basically the market rate. The rate at which banks lend to one another. And it's not set by the Fed concretely. The Fed targets a certain rate, but they have no power to actually enforce it. Banks are free to lend money at whatever interest they want.
But that actually proves my entire point. The interest rate is 'set' by economic policy. Not by command.
Also, if you actually read, I never said that Fed Funds rate is generally higher than the market rate. I said the discount rate is generally higher than the market rate. Different things entirely.
That is your base rate, which you said doesn;t exist. Which is what I explained already. That is determined by the fed. The LIBOR, is not set by the Fed, so what are you talking about? Why the hell are you bringing in the Interbank lending rate into a discussion about macro economic monetary policy? it has nothing to do with it, even if the FED rate governs the equivalent of the LIBOR.
While the fed targets a certain interest rate based on data from the Fed board who sets the rate.
And the discount rate is something else entirely , which I explained to you after you babbled on about how you don't have a base rate of interest, and told you it was the Fed funds rate. The Fed Funds rate affects all borrowing and monetary policy and impacts economic policy. When the economies fell into recession and liquidity dried up, no one went, we need lower interest rates, so lets create an expansionist policy to effect that.
They lowered interest rates to stimulate an expansionist policy and still failed, hence the ballooning public debt, when they used QE by applying Kenyianist theory.
David, what the hell are you even talking about? You don't even know which rate affects what aspect of your financial system's lending policy.
Apparantly base rates don't exist in America, and neither does education.
Modifié par billy the squid, 18 août 2013 - 01:19 .