59. How the Fed Changes Interest Rates

[th4n4t0s25]

omos are not cool! XD! nice video helped a lot!

[DMPFace]

Please explain why they got rid of the Gold Standard in 71' and the impact of that decision.

[DMPFace]

I believe one can learn more from researching himself then any one man can from a semester of a college class.

Thanks for video.

[hhaassaann134]

That was well explained, people (and textbooks) often forget to mention that an open market purchase involves the fed pumping in money that was previously not in circulation.Secondly I have a question, what is the difference between an open market purchase and quantitative easing? Any help is appreciated

[RazaAli33]

how can keeping interest rates to be as low as possible can help the business

[zx6rtt]

excellent information

clear, concise, easy to understand

thanks for the uploads

[D4Shawn]

Not to nick pick, but the "value" of government fiat currency isn't based on "faith", but rather, on the threat of force. Obviously, if people weren't forced by law to employ government fiat currency, they wouldn't. Fiat currency has NEVER (historically) arisen naturally (on a voluntary basis) in the market.

[wojtek0000]

libertyeconomics, the last part of your comment: "Inflation also lowers real interest rates by allowing debtors to pay back lenders with devalued money", would only be valid if inflation was accompanied by a similar or greater increase in wages. otherwise inflation would only make it more difficult to pay off debt.

[wojtek0000]

im confused. wouldn't an increase in the money supply cause prices to rise? more money means less purchasing power of existing money.

[InformedTrades]

yes in general an increase in the money supply should result in rising prices. Best Regards, Dave

[jaghad]

@InformedTrades

I just watched video nr 59 and I must recommend you to change the message. It simply is not correct. When the Fed buys government securities they add to the money supply in circulation, simply because they take away government securities in circulation, but in doing so they create a temporary demand for government securities, thus increasing the price of the government securities, which in turn lowers the interest rate of the security. Interest rate is not a price.

[jaghad]

@InformedTrades vice versa regarding selling government securities

[jaghad]

@InformedTrades

I just watched video nr 59 and I must recommend you to change the message. It simply is not correct. When the Fed buys government securities they add to the money supply in circulation, simply because they take away government securities in circulation, but in doing so they create a temporary demand for government securities, thus increasing the price of the government securities, which in turn lowers the interest rate of the security. Interest rate is not a price.

[subprime2006]

purchase and refinance (417K or below)

30 years fixed rate = 4.375% (cost 1 percent or 1 point to the bank or BROKER).

[libertyeconomics]

What happens when the Fed injects "liquidity" - i.e., inflation - into the loan market, by increasing the supply of loanable funds - everything else remaining static - nominal rates tend to fall. Once the inflation kicks in, then the market can and does account for this by tacking an inflation agio onto interest rates. The direction of nominal rates depends upon which force is more dominant. Inflation also lowers real interest rates by allowing debtors to pay back lenders with devauled money.

[PrettyPoeRoses]

*****

2 up

pOe

[ndnbikerguy]

this was absolutely excellent. I am taking AP MAcro online and im struggling because i have to teach myslef, and this video helped me alot. Thankyou.

Is it ok if i email you if i have questions for my class?

[InformedTrades]

Hi ndnbikerguy, Thanks for the comment I am glad you liked it. I don't respond to questions via email however there is a free ask/answer question section which you can find in the discussion forum at InformedTrades. If you would like to post there I will be happy to respond and you should get some good input from others as well. Best Regards Dave

[spyce921]

First off thank you for your videos they are very informative and helpful. My question is when the Fed drops interest rates doesn't this have a major impact on foreign investment in the economy? And from a monetary standpoint which is better having foreign investor loss faith in the economy or stop investing or having nationals being able to spend more? I hope my questions make sense thank you in advance

[InformedTrades]

Hi Spyce921, These are great questions which show you have a good fundamental understanding of the global markets. As I am limited in space for commenting here on YouTube I am going to send you over an email with a link to some more resources that answer these questions. Best Regards, Dave

[charlybrown1000]

hi dave, I am interested in what you answered to that question. Could you send me that email too? thanks for everything!

[annolvasundew]

@InformedTrades Hi Dave, really thanks for your series of videos which really help a alot! I am reading the comments with interests and i have the same questions with spyce921, can you kindly forward me the resouces which help answer those questions too? Many thanks in advance!

[lingojac]

Thank you for helping me review for my macro test tomorrow :D