CH10 Q6 RAM

The Federal Reserve and the Federal Open Market Committee. The close relationship that these two sanctions have is interesting. The FOMC has a mother son relationship it seems. The mother being the whole Federal Reserve and the son being the FOMC even thought the committee is the branch in the Federal Reserve they seem to differ just a little. If the FOMC decides to lower cost of borrowing then they can have a discount rate and that will stimulate banks to directly borrow from them. but they can also do the opposite. What I really took from this was the power that the FOMC actually has. Because they can borrow money from the Reserve directly they have the power to skyrocket interest and have people not loan or make it nearly zero and the banks will flock. They have so much more power then what it seems on the outside. The fact that they can flip the country's economy overnight. But the real seriousness is that they can effect the rest of the world significant thought.