This is a pretty good explanation of the situation. At least as far as I can tell, being a coder who's recently tried to learn a lot about macroeconomics. One

This is a pretty good explanation of the situation. At least as far as I can tell, being a coder who's recently tried to learn a lot about macroeconomics. One detail that could use correction: "The way the fed aim to control interest rates is via the amount of money that they issue into circulation." It's kinda the opposite, actually. When you hear that the Fed's cut its interest rate, that means they've reduced what's called the Discount Rate -- the rate at which the Fed makes overnight loans to major banks. If you're a major bank, and you need some cash, you can get these overnight loans from the Fed or you can take money from other places, and your decision is probably based on whatever's cheapest. Since the Fed is always there as a last resort lender for banks, interest rates for other loans between banks and from banks to businesses will generally reflect changes to the Fed Discount rate. That's how the Fed rate has a rippling influence on liquidity supply throughout the banking industry. Of course, the thing that's special about the Fed is that, unlike typical banks, it's not loaning out assets it has on deposit. It's creating new money when someone takes out a Fed loan, and it's destroying that money when the loan is repaid. Since this increases the money supply, it risks creating inflation if the economy isn't growing proportionately. High inflation is bad because it encourages spending your money now rather than investing it, and long-term growth depends on a lot of investments -- education, equipment, research, etc.