Setting interest rates. In addition to controlling the money supply through the issuance of legal tender, the Federal Reserve directly affects monetary policy by a second and perhaps even more significant means: the setting of interest rates. This is accomplished by determining the discount rate, or the rate it charges member institutions for loans. These institutions, in turn, charge other depository institutions a certain rate for overnight loans of funds that are immediately available at the Federal Reserve Bank. The rate at which Fed member banks charge money to depository institutions, known as the federal funds rate, will always be slightly higher than the discount rate, but varies from institution to institution, and from day to day. In order to turn a profit, banks that borrow money at the federal funds rate, in turn, charge borrowers—both.
This is why your savings account interest rate is pretty much zilch.....heading toward negative interest rates....
In 1964, when we were still coining dimes, quarters and half dollars in 90% silver, you could buy a loaf of bread for one silver quarter....still can, today, if you turn in your pre-1965 silver coins for fiat currency. Silver quarters are valued at a minimum of $2.86 as of 10/12/2015 based on the metal content vs. silver spot prices. With interest rates for savings practically worthless, too many people have decided to ride the stock market roller coaster....and when the ride is over, and it will be with a $17 TRILLION dollar deficit, a lot of people are going to lose their lunches, among other things.
