To me, as a naive “economic layperson“, it seems that the chairman of the fed (or at least the fed itself) has more power than all the politicians of the G8 combined. How can a single number, the federal funds rate, be such a matter of life or death?

I mean, I understand enough economic theory to “understand” it at a superficial level, but I wonder if this enormous dependency (see the current news) is really due to the objective meaning of this number, or whether the effects we’re currently seeing are not mostly caused by day traders, without any actual interest in any of the companies (or the employees) they invest in. [Probably, any reasonably cynical person will automatically reply: “It’s the latter!”]

To explain in more detail: The fed’s funds rate was changed by 0.75%. That means if you borrow $100, the difference in the interest you have to pay back after one year is 0.75. But these 0.75 cents seem to be enough to have a serious impact on the near future of the world’s economy.

It’s simply not the most comforting thought for me, to think that probably a few thousand people get a kick (and lots of money) out of playing with global recession, before they die of a heart-attack at the age of 45. It’s simply not the kind of people in whose hands I’d like to see so much power over the future of the planet I live on (and its people) .