Friday, February 17, 2006

What a perfect way to introduce the Fed (and its actions) to a Money and Banking class!

From Voice of America:

"The Federal Reserve affects interest rates mainly through its open market operations. The Fed can either buy or sell United States government securities. These bonds, bills and notes are all debt guarantees that pay interest until they are repaid. Thirty-year Treasury bonds are the longest-term debt that the government sells. The Fed suspended sales in two thousand one, but started again on February ninth.

The Open Market Committee of the Federal Reserve trades in securities as a way to increase or decrease the money supply. If the Fed wants to make a purchase on the open market, it places an order through its trading offices in New York City. The Fed buys the securities from dealers. It credits the amount of the sale to the dealers' banks."

You can read the article here or you can listen to the whole thing here.

(BTW the speaker does not exactly make it an excting me of the person who replaced Robin WIlliams (mid movie) on Good Morning Vietnam.)

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