Can somebody please give me a review of macro-economics, Bernanke, the Federal Reserve, and Interest rates

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"There is nothing wrong with America that can't be cured by what's right with America" William Jefferson Clinton

Macroeconomics is a pretty big subject. But here's what I think you're looking for:

Bernanke is the Fed chairman, making him first among equals with the the other board members.

Low interest rates make borrowing cheap, fueling economic expansion but also inflation.

High interest rates make borrowing expensive, slowing economic expansion as well as inflation.

Theory says you cut rates to stimulate growth and then, when the economy begins expanding, you raise rates to keep it from overheating.

The Fed board, led by Bernanke, sets two key interest rates: the rate at which it lends money to banks, and the rate at which banks lend money to each other (I think I got that right). Those rates serve as pegs for other rates, such as the prime rate.

Thus the Fed exerts indirect but powerful control over the nation's interest rates. (Another major influence is the interest paid by various Treasury bills and bonds, which are established at auction).

The Fed's tools are pretty crude, which is why they're usually pretty deliberative about raising or lowering rates.

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Man up.

I studied it for years and still get confused. What specifically do you need to know?

Raytri left out one thing about the Fed: They also seek to control the expansion and retraction of the amount of money in circulation.

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I wasn't born with enough middle fingers.

The Federal Reserve was created in the yearly years of the 20th century in response to an enormous financial crisis. JP Morgan came within a whisker of effectively cornering the gold market and the USA (and the world) used the metal as the monetary standard. Had Morgan succeeded, he would have been able to control our economy, budget outcomes, spending priorities etc. The USA needed an independent entity to regulate monetary policy. Years later we made another smart move.The USA finally was able to remove itself from the gold standard altogether.

Instead, they set up a system in which our economy is controlled by a group of private bankers. These bankers print and regulate the value of our currency, it's a private bank with absolutely no congressional oversight. The President gets to select the head of the reserve; but Congress was granted the power to print and regulate our money and no one else. Our fiat currency is not in our control, we are at the whim of the Chair of the Federal reserve. Our fiat currency is backed by nothing other than the fact that the Reserve can pump out more if need be. The Reserve completely control inflation/deflation, so in essence the most important thing in the country, our economy and currency, are controlled by a private bank.


"If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered." - Thomas Jefferson

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WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH

Whatever the philosophical issues, history seems to show that we're far better off *with* a Federal Reserve than without one. Otherwise Citicorp would be setting interest rates.

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Man up.

There can be logical arguments for the removal of metal backed currency. But there are no logical arguments that exist for allowing a private bank to control the printing and regulating the value of our currency. That is Congress's job, they must do it, they can't give it away. You could still have a Federal Reserve, but it would truly have to be a Federal institution, owned by Congress and held directly under their control.

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WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH

Right. The Federal Reserve is one of the biggest breaches of the constitution ever perpetrated against the american people.

I disagree. If Congress controlled what the Federal Reserve currently controls, our money supply and loan rates would be controlled by partisan politics. The Federal Reserve is independent for a reason. However, it does have a basic problem. Our money should be printed based on direct demand for the dollar and interest rates should be dictated solely by demand for loans. While the Federal Reserve takes these things into consideration, it is not forced to follow them, and it always delays the natural response of the free market. If there were a way of making interest rates and the money supply directly and immediately responsive to market forces only, I would support it, but I have not heard of any such system that is practicable.

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"I am a Tory Anarchist. I should like every one to go about doing just as he pleased- short of altering any of the things to which I have grown accustomed." (Max Beerbohm)

Right. The Federal Reserve is one of the biggest breaches of the constitution ever perpetrated against the american people.