The Fed in a Nutshell

The Fed is trying to influence spending and the main way they do it is by raising interest rates to slow down spending money becomes more expensive. By lowering interest rates they encourage people and businesses to spend thereby spurring the economy. The only lever the Fed has left if you will is the adjustment of Fed funds rate basically adjusting rates up and down. There's something called quantitative easing where they buy long-term bonds It's all very technical but the bottom line is what they're trying to do is influence spending.