Federal Reserve 101

This article was originally posted on Active Rain in August 2007.

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 The Federal Reserve pumped $62 BILLION dollars into our financial system this week because the rate on bank-to-bank loans is significantly above the Fed’s benchmark rate.  Do you know what this means?  If not, take a look at this excellent, short article I saw in the Los Angeles Times business section this morning called A primer on the Federal Reserve.

Is this week’s action significant?  As the article points out, the second infusion on Friday ($38 billion right after Thursday’s $24 billion dollar infusion) was the Fed’s biggest corrective move since its move right after 9/11.

If the Fed’s actions make your eyes glaze over, I urge you to look at this article.  Our economy impacts world markets in significant ways and we as real estate professionals are sitting in the eye of the storm.  None of us can afford to not understand the basic mechanics of what is happening.

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