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Each fluctuation in the financial markets puts strains on many hearts. Unfortunately, it’s by nature very volatile. Recently another peculiar change was noticed when Wall Street suddenly started running low on cash. Wall Street is the place that provides billions of dollars of short-term loans to banks and other such organizations. It went down to such an extent that the Federal Reserve had to take a step to control this issue before it turned into a national crisis.
The Federal Reserve injected $275 billion within one week to solve this issue. While it may not have fully recovered yet, expert economists believe it’s just a temporary issue and won’t last for long. However, it is only natural for shareholders to compare it with the seizure of 2008. Before and after that, the Federal Reserve had never interfered in any such issue. This goes to show that this has stirred enough speculation that it could have turned into a complete seizure of the financial system.
The reason behind the issue was the interest rates charged on short-term loans. They have increased to such an extent that borrowers, including banks, started to run out of cash. Analysts suggested that the increase in borrowing needs of corporations and the federal government is another possible cause. While a large population of relevant individuals believe it to be accurate, some theories also linked it to the attack on oil production facilities in Saudi Arabia.
Whatever the reason, every expert agreed that this fluke has affected every individual in the States other than the large organizations. Despite all the fuss, balance sheets of every bank in the US are still great with outstanding numbers. They are strong enough to hold against these difficult times. Considering how it made the headline of every news, the Federal Reserve issued an announcement that it’s again cutting the policy rate. It has happened second-time this year reducing it to a new range of 1.75% to 2%.
When comparing the short-term loans with other sources of acquiring financial benefits, it was concluded that the best approach is to store your money in savings accounts for the problems that might come in the future. The interest rate on short-term loans is so high that it’s very challenging for every organization or an individual to afford them. An economist from a reputed university of Boston blamed foreign banks for this. It is believed that the demand for short-term loans rapidly increased in foreign banks in the Middle East after the attack in Saudi Arabia. It is while tending to their demands that our own Wall Street ran out of cash.
King of Kash has explained how a savings account can be your best friend when it comes to times of financial crisis. The banks are still stable even when Wall Street is facing issues. You’re safer working with banks, especially when putting money in a savings account. You will, without a doubt, get a high-interest rate in return for your money no matter what problems financial markets face.
People either invest their money in something or keep it in a bank. One can’t be sure how the financial market will treat them, especially during the time it’s going through. It was also no less than a shock when all of Wall Street faced the issue of cash shortage. People want to make more money using their existing cash, as the value of cash only decreases with time. By keeping resources in a savings account, one can rest assured that its value isn’t going down, as it keeps increasing with interest. In addition, you find yourself extra profit at the end of each term.
