The Federal Reserve does not decrease it's holdings of cash to buy the treasuires. It's brings up Wells Fargo Reserve account and electronically punches in $1,000,000.00. Another way of saying it, they created the money with some key strokes on a computer. How much can they create? How how does the number system go? infinite? So they did not decrease their holdings of cash. They created the money from thin air or as Bernanke says "electronic printing press".
TOO LATE!! I should have checked my email earlier! Theoretically, you are correct; if no one wanted to "lay ball," so to speak, OMOs wouldn't work. But the reality seems to be that there is always someone willing to buy & sell.
I have a question : it might be stupid but. . . how the transaction of the FED making open market purchases or sales occurs. I mean, let's say with an open market purchase, the commercial banks may not be willing to sell there securities to the fed or in case of open market sales, banks may not be willing to buy the securities, what happens then. I don't know if my question make sense, but I have my final exam in money and banking in about 12 hours, so an answer would be great, thank you.
1) fixing high levels of inflation means we would slow things down, or take money OUT of the economy - this is done when the Fed sells securities. The Fed ends up with the cash, the economy ends up with the securities.
2) Trying to fix a recession means we would speed things up, or put money INTO the economy - this is done when the Fed buys securities. The Fed ends up with the securities, the economy ends up with the cash.
You and most politicians . . . you are definitely not alone. You may want to be sure you've also watched the preceding videos on money and money creation.
Fiscal policy is the process of taxing citizens to reduce aggregate demand, and spending money. Could you explain to me the process of monetary policy and why it is used?
I love your videos, its simple, precise and to the point.
Romeodxb 1 week ago
THANKS SO MUCH! :D
itempus 1 week ago
Like any other commodity, if you increase the supply, he value fall; if you decrease the supply, the value rises...
mjmfoodie 1 week ago
how does Expansionary and Contractionary monetary policy affect the exchange rate in a country...
bladewolf390 1 week ago
0:01
billybob7757 4 months ago
What's happen if BANK 1 in the case of "OMO selling" doesn't want to by from FED the bonds/security?
cinqueottavi 4 months ago
@cinqueottavi then the gov't will search for another buyer... and its not only banks gov't sell to also corporation...
bladewolf390 1 month ago
These are going to save me in Ap econ thank you sooo much ! You talk very fast though
Musicfreaklolduh 4 months ago
very good explanations thanks!
kenwkto 6 months ago
The Federal Reserve does not decrease it's holdings of cash to buy the treasuires. It's brings up Wells Fargo Reserve account and electronically punches in $1,000,000.00. Another way of saying it, they created the money with some key strokes on a computer. How much can they create? How how does the number system go? infinite? So they did not decrease their holdings of cash. They created the money from thin air or as Bernanke says "electronic printing press".
ChulaKirby 7 months ago
Hi. I cann't find your episode on money creation on your channel. What's the name of that video?
Soldier957 8 months ago
@Soldier957 "Episode 30: Creating Money"....
mjmfoodie 8 months ago
wow this is amainzg!! excellent descriptions, thnak you so much
MTran0708 9 months ago
I LOVE the pictures...
bourneyesterdayi 9 months ago
this is good. bravo
fanaticastype 10 months ago
Start with the bank selling OMOs That way buying them (back) makes much more sense.
ryno9292 10 months ago
Love this. I'm doing an essay on the Fed and I'm an English major!
Trimbler00 11 months ago
These basic policies look good on paper, or in this case video, but they haven't done too much to stimulate the local economy.
maguzzy 1 year ago
TOO LATE!! I should have checked my email earlier! Theoretically, you are correct; if no one wanted to "lay ball," so to speak, OMOs wouldn't work. But the reality seems to be that there is always someone willing to buy & sell.
mjmfoodie 1 year ago
4 hours leftttttt...
foti658 1 year ago
I have a question : it might be stupid but. . . how the transaction of the FED making open market purchases or sales occurs. I mean, let's say with an open market purchase, the commercial banks may not be willing to sell there securities to the fed or in case of open market sales, banks may not be willing to buy the securities, what happens then. I don't know if my question make sense, but I have my final exam in money and banking in about 12 hours, so an answer would be great, thank you.
foti658 1 year ago
You are wonderful!
bobichina 1 year ago
I don't get how to OMO works to fix high levels of inflation or trying to fix an recession. :(
3lnenetravieso09 1 year ago
@3lnenetravieso09 1 sec ago
Well, they are two different things:
1) fixing high levels of inflation means we would slow things down, or take money OUT of the economy - this is done when the Fed sells securities. The Fed ends up with the cash, the economy ends up with the securities.
2) Trying to fix a recession means we would speed things up, or put money INTO the economy - this is done when the Fed buys securities. The Fed ends up with the securities, the economy ends up with the cash.
mjmfoodie 1 year ago
@mjmfoodie Thank you, it makes sense now.
3lnenetravieso09 1 year ago
Great job explaining !!
604ravi 1 year ago
good one . keep it up mam
2idiotsdwarka 1 year ago
I'm counting on this for my revision for the A levels lol
fire1ce 1 year ago
You and most politicians . . . you are definitely not alone. You may want to be sure you've also watched the preceding videos on money and money creation.
mjmfoodie 1 year ago
i still dont get it :(
chiledecarne 1 year ago
this might just save my ass in the exam
djibrilcisse22 1 year ago
@djibrilcisse22 xaxa me too...
foti658 1 year ago
whats the impact of monetary policy in a closed economy?
admrvn 1 year ago
Thank you! This gave me a clearer picture of the federal funds rate and discount rate.
SilenceBroken23 1 year ago
Fiscal policy is the process of taxing citizens to reduce aggregate demand, and spending money. Could you explain to me the process of monetary policy and why it is used?
MetalBassjunkie420 2 years ago
thx, I am kinda waiting for ur exchange rates, Finals next week =[
fh1mahfanzai 2 years ago
Thanks it's great even though I couldn't find the next episode for exchange rates.
Thank you.
mralmoca 2 years ago