I have found the best resource for understanding the Federal Reserve is reading its annual reports, especially the financial statements near the very end. Go here:
http://www.federalreserve.gov/boarddocs/rptcongress/annual02/default.htm In my view, there's nothing like real numbers to get your brain juices flowing. Note the $20-30 million that the Fed pays to the US Treasury each year. Exercise for the reader: why does it make that payment? -gil -----Original Message----- From: ArmChair List [mailto:[EMAIL PROTECTED] On Behalf Of john hull Sent: Tuesday, January 13, 2004 3:13 PM To: [EMAIL PROTECTED] Subject: Three Fed tools, which increases money supply over time? I have blanked and I cannot shake it. My apologies for what seems a bonehead question. (Certainly not my first.) Old textbooks aren't helping me, either. There are three money supply tools used by the Fed. It can buy & sell bonds, it can change the reserve requirement, or it can change the interest rate it charges banks on overnight loans, right? If the money supply is increasing over time, then it can't be because of the second two, since they can only go so low. Is it the first that causes money supply to grow at x% per year? How does this happen? Losing my mind, jsh __________________________________ Do you Yahoo!? Yahoo! Hotjobs: Enter the "Signing Bonus" Sweepstakes http://hotjobs.sweepstakes.yahoo.com/signingbonus
