I learned that low fed interest rates makes ppl borrow more, stimulating economy as money circulation is higher. why ever increase it then, if increasing it worsens the econ?
Also ,is the fed reserve actually the goveernment bank? heard it was still a giant private bank and the goverment has nothing to do with it
In: Economics
Basically the federal reserve lends banks money at the cost of the paper its printed on, now in lending they give an interest so say they lent a dollar they want a dollar and one penny back, raising interest rates mean they earn more money on the return, at the end of the financial year, also raising the rates decreases how much is in circulation which in truth raises its value, correct me someone if I am wrong, but I’m pretty sure this is right.
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