How the Fed Steers Interest Rates to Guide the Entire Economy | WSJ

I'm considering a review of allocations on my 7-figure portfolio, particularly in light of the pause in interest rate hikes. I'm eyeing some high-risk, high-reward opportunities. Crypto and emerging markets seem intriguing. Anyone else exploring these?

The analogies used in this video are terrible lol

Does the Fed really make the decision or simply follow / chase the US02Y bond? Overlaying the graphs from the 90s to now, it suggests Fed chasing it.

Is the IORB same as the Fed Discount Rate?

where does the Fed discount rate factor into all this?

Sept 11th 2023. I still cannot find a parking space at Costco.

such useful video

Taking early notes from Warren as to the importance of sound asset diversification and risk management It can’t be overstated. I’ve been trying to grow my portfolio of $300K for sometime now, I would greatly appreciate any other suggestions.

What a MESS the Feds have made of our world in such a short time. Fill their pockets from DEBT 🤑

The stock market will go down further and goodluck on the fed pausing rate hikes w/ all the hawkishness that has failed to keep up with inflation

Where do Feds get the money to pay interest on the bank deposits?

Well, i do have my reservations about the economic crisis. Wall Street pitched so-called quality stocks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stocks have underperformed the S&P500 this year, My $650K portfolio is down by approximately 20%, any recommendations to scale up my ROI before retirement will be highly appreciated.

I have a question, Why does bank lend to other banks when the IOER is higher than federal funds rate ? It is safe and risk free? Then why lend?

What does "short-term money" means?

Yo w quiero mi money 💰

THE FED IS NOT The DRIVERS!! EVERY SINGLE WORKER WHO IS NOT PAID BY TAX DOLLARS. THIS IS A FREE MARKET!!!

So well explained

Problem is the only can hit the brake with the left foot

the shell game 101.. inflation will only subside if wall street crashes... CEOs and corporations are responsible for inflated prices because their bonuses are based on profits while reducing operating costs that keeps benefits and salaries low.. deregulation gives these ruthless corporations and CEOS the green light to overrun the masses. back in the ol days the government fought corporate minopolies now he corporations have their henchmen politicians passing laws that perpetuate big biz ripoffs and political backoor schemes .in the past shortages would drive up prices only for a while till production increase returned prices to normal now wall street corporations and speculators are driving inflation... increasing interest rates is just a smoke screen to draw sharks away from a runaway speculative bunch whose $$$ prop up prices until we have a recession and people stop buying.

How wrong can this video be? Discount rate is not the same as IORB. If you want to make a video, make sure you have the basic concepts straightened out first. The fed funds ceiling is set by discount rate not IORB. Totally wrong on elementary stuff. 😂

Usually during this time of the year, we get to see certain stocks go up in the market, but that’s very unlikely this season cos of the recession and overall economic crisis, issue is I've been holding a lot of stocks hoping to sell for profit this month but I'm not sure if to keep holding or sell, I’ve been running at a loss since Q2 and 2023 is really not looking favorable for investors. The market hasn’t been looking good since COVID, and it will get worse 2023, you should sell.

GOVERMENT FAILURES CAUSED UNRECOVERABLE DAMAGES - I purchased my first home in 2004 when the newspapers were saying that the prices will double in 10 years but 15 years have passed and the home prices did not recover; because of government failure to regulate we had the housing bubble; in 2019 news papers were saying that recession in inevitable and overdue so I put my house on market and after nearly 11 months it sold with a 30% loss in March 2020 when the pandemic hit; I moved to another state and I slowly put the money to stock market; because of the government stimulus packages stock market soared and I made some money for which I paid taxes but than again due to the government actions I lost more than I earned in the stock market; 2022 was the fist year when my wife had jobs for the full year; I sold most of my stocks in 2022 expect few, and I am looking for home to buy the home prices in South Florida are still 60%-90% above 2019 prices; BIDEN says he will build 1mln affordable homes (1mln is not even enough); I saw some price drops but some homes are still listed 90% above 2019 prices. I just saw Dr Horton increase their home price for summer delivery by 7-8% vs homes with delivery for March-April in Plant City, FL; after reviewing IRS tax books I found out I can only offset $3,000 in capital losses from my income for the tax purposes; well in that rate I will die before I will be able to deduct the capital losses suffered in 2022; I also can't buy a home now because they are too expensive. It all failure of Government; it is getting worse and worse.

I'm surprised there aren't more comments that are critical of the fed's actions. They are raising interest rates because they think that inflation is caused by the economy going "too fast" or sometimes because the economy is too "hot". Are they kidding? The economy is shrinking in all kinds of ways. Failure rates of business are skyrocketing.
It's obvious rate increases will not help. Inflation in the important things like food and fuel and rent, will all continue.

We are all in a Crisis. Health crisis Covid. How working ? ?. And who doesn't have Bill. Fed over stepping. For fake reasons.

hammer screwdriver got it.

Steers? hahahaaa! In the early 19th century, the forerunner to the Federal Reserve was the Bank of the United States. When Jackson became president in 1829, he vowed to curb the Bank’s power over the national economy, calling the institution “a hydra-headed monster… it impaired the morals of our people, corrupted our statesmen, and threatened our liberty. It bought up members of Congress by the Dozen… and sought to destroy our republican institutions.” Today, many free market economists are saying the same thing about the Fed. PONZI SCHEME.

as hard as the fed has grappled with inflation, no one can assure if there's no fallout to come, leading to dire situation as in it bubble era and subprime crisis.

STOP PRINTING DOLLARS

The burdens of high inflation fall heaviest on those who are least able to bear them." The solution which is higher interest rates , reduced demand , higher unemployment will also fall heaviest on those who are least able to bear them. what moves can we make to generate more income because I can’t afford to see my savings of about $320k turn to dust

isn´t it backwards? the interest on reserve balaces serves as the lower limit for lenders and the overnight reverse purchases serves as the upper limit for borrowers

The title should be How the Fed Steers Interest Rates to Destroy the Entire Economy. What they are doing is going to make things much worse for the average consumer. For example, let's say I need a new car. A couple of years ago I could have purchased a new car for $20,000. Now the same car is $30,000. That's 50% inflation. So what they are doing is raising the interest rate to 9% instead of 3% which make it unaffordable. Thus their plan is to make products unaffordable in an effort to force the car dealers to lower their price. If that works it will cause the dealer to lay off employees to make ends meet. And will take awhile for the prices to drop. Meanwhile I can't afford a car because the interest rates are too high. So everyone loses. The inflation was caused by supply shortages due to covid lockdowns. Raising rates does not increase the supply. Only increases the cost so that no one can afford to buy which will lead to unemployment. And destroy the whole economy.

Why all of a sudden is a supply chain an issue? Wasn't 3 years ago. I can tell by jobs report the economy has slowed.

Interest on reserve balances (IORB) serves as a floor for the fed funds rate (FFR). The discount rate is the effective ceiling for the FFR. At least that’s my understanding.
By my lights, IORB are a subsidy to the banking system as they reduce the Fed’s remittances to the Treasury. Fed remittances to the Treasury are expected to go to $0 as it raises rates, which increases the quantity of IORB paid out. The Fed will cover such ‘losses’ and the issuing of new required liabilities through the creation of a ‘deferred asset.’

Its a great explanation of how feds work for banks but they are all forgetting the human aspect part of this equation. People wont stop working or buying things. Living in the USA has trained all of us to work two or three jobs so we can buy the things we need and the things we want. Feds should note this time its different and raising the federal funds rate is not enough.

The banking system is based on Keynsian theory. Keynes who was a very corrupt man with a prediliction towards children didn't understand economics. He cheered on the Bank of England's fake market for the new English pound back in the 30s. The whole system is a massive fraud as we're about to find out. Central Bank Digital Currencies are coming next: Race War, Covid, Ukraine, World War, Climate Crisis, CBDCs in that order. Its the CENTRAL BANKS driving all these fake emergencies.

Are banks REQUIRED to abide by the Federal Funds Rate set by the Fed? If the Fed sets the FFR at 5%, can a bank still charge 3% interest rates if they want, or are there laws and/or incentives that force the banks to abide by the rates set by the FED?

The Federal Reserve should immediately match the Federal Reserve interest rate to the inflation rate. That would swiftly bring down inflation and interest rates. Sure, it would be disruptive over the near term, but, that's what is needed.

correct me if I'm wrong .isn't the floor should be determined by IORB (Interest On Reserve Balances)

What does it have to do with residential housing,, people who already have mortgages. Why do you have to punish them, make interest rates based on income brackets. You draining middle low income class, those who sit on cash will move their wealth on high interest savings.
Play stupid games, win stupid prizes.

Billionaires don’t give it up without the fight, they don’t care how much inflation hurt the poor plus you are adding additional pain on people that could be unemployed or going through major life changes. You can’t just raise blanket rates on everyone, it must be progressive based on the income and shouldn’t be raised on unemployed, of course those who live off dividends such as Warren buffet shouldn’t be considered unemployed, if you collect millions on stocks you should pay tax like everyone else without hiding it overseas, or you should show that you really invest in a good cause not to create fake charities that don’t contribute anything to society. Enough is enough already.

This is stupid game and it will collapse hopefully soon. You create problems then punishing regular folks for your mind games. How is it fair? I hope revolution will take down these stupid, useless billionaires.

This video seems wrong. The IORB sets a floor on the Fed Funds rate, not a ceiling. Or did I miss something?

Excelente información

🤣🤣🤣

The charming tortoise gratifyingly fool because october regionally hammer throughout a jobless mandolin. spicy, slimy kettle

Federal Government needs to enforced and protect the laws of federal reserves and federal government, escrow and mortgage loans, credit cards, federal taxes, banks and their services, all legal businesses example online ecommerce, brick and mortars and other businesses, hospitals, federal past or present students, federal past or present students loans users, stimulus checks, resources, and economy. The scams and cyper attack as been horrible and has massive decreased federal, state ,city and counties USD currencies, education and USD currencies, living and housing meaning rentals, property ownerships and buying property USD currencies, and the business sales USD currencies in the economy. That's way it still does not seems to be enough. We doing the best that we can. We are still in needed. What more needs to be done?

Federal USD Dollars and Coins is what we use in US and needed to be enforced. The Cryptocurrencies example Bitcoins and there is others that need to have some respect for USD and it's coins its so fad in demand. But, not a USD Dollars and Coins so don't let it over turn our or mimick our USD Dollars and Coins because the currency are a different count and
government and population is not able to afford much with pricing if the currency have confusions. Let set the record straight on the laws of the USD and Coins and who use it USD and Coins vs Cryptocurrencies.

The Obama and His Administration did not reinstated the Federal. We don't how many Current or Former Presidents and Their Administrations did not restated the Federal. We have to be careful with the government and popluation on what is being done and going on in the economy etc because of his administration if not others have been against the Federal Reserve and Government.