Fed controls the interest rates by increasing and decreasing the money supply but does it not incurr a loss...
493210
The Fed does lose money in that specific case, however its overall operations cover the cost.  In addition, the Fed is a peculiar not for profit organization.  It has a statutory limit on its profitability.  Any excess profit is returned to the Treasury.  In addition to its lending activity the Fed charges fees for services just like other banks.
479833
The Fed is still raising rates.  The country is at war (always creates inflation).  Unemployment is low and the economy is booming.\n\nRates will go up.
477922
THE FED WILL INCREASE THE RATE BY AT LEAST ANOTHER .75% THIS YEAR. THIS WILL BRING THE PRIME TO ABOUT 8.5% SO YOU BETTER BE SURE OF THE INCREASE. LONG TERM FORECAST IS PROBABLY A MUCH SLOWER GROWTH OF THE FED RATE.
835514
Interest rate increases in general are made to curve spending of the people.  The increase in rates makes it more expensive to get a loan.  What happens is people stop getting big loans to pay for large items like a house.  Less money out in the open causes less inflation (less suply the greater the value).  That's my two cents though its only a penny for my thoughts so the bigger question is where does the extra penny go?
435918
The amount of cash banks have determined by three variables.  The first is required reserves.\n\nThe Required reserves of money that banks must hold in order to satisfy customer needs.  This is determined by a government agency called: The Federal Reserve or 'The Fed'.  \n\nFor example if the Fed sets the required reserve rate at 20% then banks will have to hold 20% of all deposits.  So if someone deposits $100 and the required reserve is 20% then the bank will have to hold $20 to be available for withdrawal on demand.  100 x .20 = 20\n\nThe second variable that determines how much banks hold is the: \n\nDiscount Rate [the interest at which the Fed loans banks money if they accidentally run below their required reserves] \n\nAnd the: Federal Funds rate: [the rate at which the Fed mandates that banks loan each other money]\n\nIt's profitable for banks to make loans but they don't want to fall under their required reserves otherwise they'll have to borrow money and that gets expensive.  \n\nSo when the Federal Funds Rate and the Discount rate are high they'll keep more excess reserves so their chances of accidentally falling under their required reserves are low and they won't have to borrow money.\n\nWhen the interest rate is low it's cheap to borrow money and banks don't have to worry about falling under their required reserves so much.  So they'll make more loans and have less money in their reserves.  Because if they run under their required reserve ratio because of unanticipated demand [a lot of people want to withdraw money] they can just take out a loan at a low rate and they won't lose too much profit..\n\nThe third variable is the Feds open market operations.  By buying or selling bonds the Fed can influence how much money people deposit in banks and interest rates.\n\nSo those three variables are primarily what determines how much money banks [large and small] have on hand.  Smaller banks are allowed to have a lower required reserve [they aren't required to hold as much money by law] because they don't have the vast resources of larger financial institutions.
376376
This actually has some interesting impacts on the way that the money supply is measures and the Fed will have to operate.  My understaning that e-currency cannot be measured in the M-1 supply, which is what the fed tries to regulate.  The existence and wide use of e-currency may contribute to inflationary pressures that the fed cannot regulate through reserve requirements and open market activites.  Interesting question and topic here.
801457
Lots.  Let's see, where to start.  How about higher interest rates.  The Fed just keeps on increasing the rate to try to cool down the economy but this put pressure on everyone with adjustable rate mortgages and interest sensitive credit cards.  This sucks money out of the private sector as does the higher cost of gas and therefore we have less money in our pockets.  We tend to borrow more and with more credit card debt comes more chance of default.  As the cost of increased gas and therefore inflation then workers want raises and this pressures CEO's to play with the books to keep up their record profits.  How's that for a start?
819171
Hey! Not only the FED (The Central Bank of the United States) uses its primary rate (a reference rate to the market), but currently, most of the countries in the world utilizes the same system. It's called "inflation target" and its done through the teories of monetary policy. \nThe way it works its pretty simple: the Congress (usually) establishes the inflation target (let's say 3% per year) and the FED focus on it in order to meet the number.\nHow does it impact in your life and in inflation? When the interest rate (primary rate) goes up, the "cost of money" increases, reducing the availability of currency in the nation. Less money, less expenses; less expenses, less demand, less demand leads to low inflation, due to the fact that companies will have to compete in a market with less impulse to consume.\nAt last, but not least: combating inflation is a very important government role. As a guy from Brazil - and my country used to have a 50%+ inflation rate PER MONTH - I can tell you that what inflation does it is pretty nasty: captures the income of the poor and the lower middle class.\nIn Economics inflation is also called  "the taxation of the poor", because it takes the money of low income families before they even can spend it.\nHope it has helped you somehow!
256351
increasing the money suppy when unnecesary will decrease teh value fo teh dollar adn vise versa
392853
The interest rate on 10-year Treasuries is now 50 basis points higher than it stood at the start of the year. This rise coincided with a run-up in many commodity prices.\n\nThe market is concerned about incipient inflation but has confidence (at least no less than a month ago) that the Fed will succeed in eventually getting that inflation under control. The argument is that the Fed impacts the economy primarily through its effect on long-term real interest rates, so that the Fed will somehow have to get long-term real interest rates to rise in order to slow down the economy sufficiently to offset the incipient inflation.\n\nOver the past couple of years a few culprits have been identified as causing low long-term yields including foreign central banks managing their currencies, China & Japan, oil exporters not spending their windfall, Saudi Arabia & Russia, and pension funds moving out of stocks and into bonds to better match their long term liabilities.\n\nWith China slowly moving to a floating exchange regime, Japan ending its quantitative easing, the collapse of many middle eastern stock markets, and pension funds possibly completing their asset reallocation, current long bonds may be reflecting a drying up of demand\n\nAs the housing market continues to weaken it will have serious ramifications for the overall US economy. "The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession. A turn in the housing market is central to our economy with a downturn in housing meaning more than 1.3 million lost jobs, bumping up the national unemployment rate by 1 percent and the unemployment rate in house-mad California by 2 percent. Those numbers don't include likely job cuts in housing-dependent businesses, such as mortgage banking, furniture and building materials. A bubble burst would mean the loss of 5 million to 6.3 million jobs. \n\nThe housing run-up has financed consumer spending, creating more than $5 trillion in bubble wealth. Consumers have used "cash-out" mortgages to pay for everything from new kitchens to college tuition. \n\nTo answer your question Yes the Federal reserve acted too late to slow current inflation and the 2007 recession.
288971
You are allowing the bank to hold your money and they put it to work by allowing others to borrow it....if they make a good percentage then you will make a good percentage.  If they don't ...well you don't.
508214
The Reserve Bank of a country usually will decide how much money is in circulation.\n\nThis is governed by the interest rate it will charge for the money that is on offer for borrowers which can be other banks who will in turn lend it to other borrowers.\n\nIf the inflation is likely to increase then the supply of money is restricted by increasing the interest rate so that the borrowers will not borrow or borrow less.\n\nConversely to kick start the economy the interest rates are decreased so that the companies will borrow and start the businesses and promote economic growth.
404058
Government cannot control prices or inflation by regulation.  Well they can, but that's called communism, I believe.  They can control inflation, however, by swiching back to the gold or silver standard - but they won't because that would mean they couldn't run up debt like they do now.
62039
Since the late 1960s the Federal Reserve Board has expanded the growth of money stocks at generally increasing rates. These policies have led to increasing inflation. The key elements in the Fed's failure to chart a noninflationary course are (1) its political composition and (2) its preoccupation with the interest-rate structure. Because Fed terms are so long, no President can exercise significant control over this major determinant of economic policy. The Depository Institutions Deregulation and Money Control Act of 1980 extended the Fed's control over commercial banks and monetization of debt. Congress must deal with the inability of the Federal Reserve System to function as intended. It could assume direct control over monetary growth, or it could bring central banking functions under the control of the President. A final option, and a true institutional reform, would begin with the abolition of the Fed as a policy-making central bank. This would allow the banking system to become competitive and thus innovative and in all likelihood serve consumers better than the Fed has done
820238
Its a slight correction in the market.....If interest rates stay low, you will see the market pick up again.....Its also the off season, come spring, it should pick up again....
180461
You are betting you will need it they are betting you will not. It appears the insurance company's are winning. Plus they can not lose for when they start to lose the government just allows then to raise the rates.
1186322
The FOMC (Federal Open Market Committee) sells funds into the market to help speed up the economy by making it cheaper people and business to get cash.  The do the opposite to slow down the economy if they fear inflation.