How the Fed affects Interest Rates, Inflation, & Unemployment Explained!
In this video I cover how the Fed impacts borrowing rates for banks, thereby affecting interest rates, inflation, and unemployment. The Fed was created in 1913 to alleviate financial distress. Jerome Powell is the current chairperson of the Fed. The purpose of the Fed is to keep unemployment and inflation in check. One tool they use is setting the rate banks use to lend money to one another and setting the reserve requirement. If bank borrowing rates go up, then the bank passes these costs onto the people via interest rate hikes. Interest rates is basically the cost of having debt and loans. Higher interest rates typically means that people are less likely to spend and more likely to save money. Less spending results in slowing of economic growth and reduced prices on goods and services. Slow economic growth results in higher unemployment. So why is the Fed planning to raise rates? Because we printed too much money in the past couple of years and now there is a threat of hyperinflation.
Federal Reserve Website: https://www.federalreserve.gov/
**I am not a financial advisor or crypto advisor; this video is meant to be used for entertainment purposes only and represents only my personal opinions**
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