The familiar law of supply and demand also applies to money and credit. If there is a lot of demand for money or credit relative to supply, interest rates rise and vice versa. However, the Federal Reserve Bank creates all the money, and it is their job to maintain moderate interest rates so economic actors can easily borrow money and keep the economy moving. In times of recessions or credit liquidity squeezes (not enough money supply to satisfy demand), the Fed injects money into the banking system to bring down interest rates. As I said above, in 2020, the Fed injected enough money to essentially bring interest rates down to 0%.
Introduction
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Your First Big Job: How to Get It
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Flourishing in Your Job and Well-Being in Your Life
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The Importance of Behavioral Economics
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What is Money?
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Analyzing Your Current Financial Situation
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Budgets and Saving
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Credit Cards, Auto Loans, and Other Personal Debt
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Student Loans
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Understanding the Time Value of Money
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Banks and Financial Institutions
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Buying a Home
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Insurance: What Do You Need?
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Investing Fundamentals
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Investing in Mutual Funds
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Saving for Retirement
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Fiscal Policy and Monetary Policy-Government Intervention in Your Life
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