The Fed Is Giving You FREE Money (More Stimulus & 0% Rate)

The Federal Government had a meeting where they broke down what they are going to do for the economy as in stimulus, and also what a 0% interest rate means for you.

1. ( look at Congress and the fed and see what they are doing)Last place to look for guidance about the Economy is the Stock market
– Businesses are closed
– Record number in unemployment
– No idea when it’s going to end

But yesterday:
– an article came out about a drug being worked on to compact the virus: with liver problem side effect and a 60% success rate.
– The market went up to 4% and now it’s down again
– Its very emotional, and that’s why it’s not the best place to look at.

2. What was the Meeting about
– I’ll summarize one hour in 2 sentences
– The idea is: they don’t how long this will last for, but they are willing to whatever they can to help, that’s within the law.

Sections I think are most important:

1. Fed Cut Rates to Nearly 0%: ( savings accounts, Rate of lending)
Means good news and bad news for savers and investors and also the average person.
For example:
– When banks can borrow money cheaper, they can lend money to you guys for cheaper also
– Which basically means, people can buy houses, cars and other credit avenues for a cheaper price
– This promotes spending, but also business do the same, which them promotes employment ( it’s the trickly down system)

Also: Increase property values, since it promotes a buyers market
– Saver doesn’t win
But again: the fed is worried about the economy, not just savers currently.

2. How long will this Last
– They don’t know, but the last time Rates were this low in 2008, it lasted for 7 years
– But this is a different situation altogether

And that’s why they are also Buying Treasury bonds:
– The more bonds they buy the more money that’s in the economy to again to control interest rates. It makes the price of the once in the market more valuable but the interest rate goes down.

3. Bank Reserves
– It uses to be an average of 10%, so for every deposit, the bank got it was required by law to hold 10% of that money in reserves
– Now they effectively cut it 0% and also stop the amount of transaction for a savings account
– Meaning banks can lend a lot more money

For what:
– The idea is to speculate more money into the economy

For example:
– If I deposit 100 and the bank has to keep 10$, then they can only 90$ but now they can lend the full $100.

4. More powers
– Quantitative Easing: Buying long term securities to introduce more new money into the economy
– Security Lending Facility: that they used to actually trade mortgage back securities for treasury bonds
– Auctions Facility: to let banks bid on the interest they will pay to borrow money from the fed.

Overall:
– One power I didn’t mention that fed has is Perceptions, to make look things to look one way to promote something
– So what I know this, the fed has no idea of what’s going to happen
– They are just trying to keep the house from burning down

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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