The discount rate | Money, banking and central banks | Finance & Capital Markets | Khan Academy

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The discount rate and window. Lender of last resort. Created by Sal Khan.
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Finance and capital markets on Khan Academy: We all use money and most of us use banks. Despite this, the actual working of the banking system is a bit of a mystery to most (especially fractional reserve banking). This older tutorial (bad handwriting and resolution) starts from a basic society looking to do more than barter and incrementally builds to a modern society with fraction reserve banking. Through this process, you will hopefully gain a deep understanding of how money and banking works in our modern world.
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[@LucienHolmes]

You're a good instructor. That was something I should have known a long time ago. Thank you.

[@almaadheedalmaadheed]

“Reminiscing about the gold standard” lmaooooo

[@williamkane1333]

thank you so much Sal.

[@JohnDoe-zm3rw]

I appreciate how you make it so easy to understand.

[@rambo-rb]

great video - thank you! Discount rate well explained ... very relevant since Republic bank incident last year.

[@armandoacosta2707]

If I ever get to become a financier is all thanks to this guy

[@JDWilliamsPD]

Bravo!

[@dlessandllow8545]

Great tutorial, thank you for this video.

[@jakepazz9264]

you're amazing, even 12 years later

[@MyLittleGangstaPony]

nice explanation! Thanks!

[@jessvanblarcom]

thank you

[@alirehman6937]

please elaborate about DISCOUNT RATE concern in estimation of a project cost.

[@kartikrathore5720]

Thnaks

[@endererol3006]

A decrease in the discount rate decreases the money supply? Is it TRUE or FALSE? and Why? can you explain it? thank you

[@louiswachira7015]

It is false, a decrease in the discount rate increases the money supply, this is because it is cheaper for commercial banks to borrow money from the Fed, meaning they can borrow more money and loan it out to individuals and businesses at a low interest rate, thus increasing the money supply in the economy.The Fed decreases the discount rate when it is trying to implement an expansionary monetary policy.

[@pedroberoes49]

Can anybody explain something to me. When a bank borrows directly from the Fed at the discount rate and after the loan is paid off in full with interest, does the Fed just write off what it received from that loan plus interest? Kind of like how Sal mentioned at 6:35.

[@kasualstudio7141]

Very helpful thx

[@hwt2009]

the fed funds rate is reported to be 0; why would any bank with excess funds want to deposit their excess reserves with the feds? could there be a situation where a bank deposits its excess reserves with the Fed but no other banks wants to borrow?

[@TheJesseGuerra]

Hello Khan Acadamy, Can you please create a video that (a) explains the concept and principles of 'Forward accumulation' & 'Backward Discount', and (b) how these things can be used practically for individual/family/ business/investing finance??? Thanks.

[@faridelhadedy9691]

U r the best Thank you

[@hwt2009]

before 0ct ,2008 the overnight deopsit rate was zero and the discount rate was set below the fed funds rate; after oct 9, 2008 the federal reserve initiated interest payments at Federal Reserve Banks. This was done by Bernanke. so there are three different rates a) the discount rate where the feds lend a bank b) the Fed funds rate for interbank loans c) the overnight deposit rate khans videos are out of date

[@hgkhgv12]

In this playlist you have been talking a lot sense except starting at 02:40 here , you think that FRN is an asset to federal reserve. It does not make sense. All federal reserve will do is simply create and entry in the account of the bank which sold the T-bill. refer wikipedia.

[@zoaics]

Rip graphic

[@409raul]

oh come on, those buildings are cute! haha

[@remelrochester4480]

On

[@bushrahussain14]

Hi, i am studying accounting currently at college i was wondering if you could possibly do a video on settlement discounts and T accounts?

[@yermomrhot]

sometimes this is stupid... when demand is low, and supply is high = price/interest is low but when america issue treasuries to be bought by countries. the more the demand the low the interest...

[@LFSPharaoh]

that's because the price of treasuries dictates a treasuries interest rate that it pays. If the price goes up, the yield, or interest rate, goes down.

[@freemoneyworldwide7416]

When demand is low, and supply is high= price/interest is low. But when America issue treasuries to be bought by countries. The higher the demand the lower the interest.

[@tamalc370]

Please explain re discount of bills !

[@theinspirething]

if I didn't borrow money, should I multiple my proceed with discount rate?

[@pongman]

I still say if you lower the price of food and energy then the economic crises would disappear. I don't quite understand why we can't produce more food and lower prices for everyone so that people can have more purchasing power to buy the other things that keep the economy going. John K. Galbreath did it somewhat in WW2 but that was a price freeze.

[@jnp4825]

intresting

[@davidlawrenceloo4892]

Happy 10 year anniversary!

[@TheSyed27]

Is there gold in The World bank ?

[@jackuy12345]

lmfao