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I’m looking for simplified explanations how the fed increases the money supply in the US? Like do they just print more money or do they issue more bonds?
Also what do they mean by the fed increasing those reserves?
I’m looking for simplified explanations how the fed increases the money supply in the US? Like do they just print more money or do they issue more bonds?
Also what do they mean by the fed increasing those reserves?
By buying bonds. Each sale puts more cash in the hands of the previous bondholder. The theory is that money than is distributed throughout the economy and counteracts deflationary tendencies.
Dollar bills (Federal Reserve Notes) are not dollars. They are IOUs denominated in dollars, but have a minus value until redeemed.
Pursuant to Title 12 USC Sec. 411, dollar bills are "obligations" (debt) of the US Gubmint. To authorize issuing more notes, Congress has to have a deficit.
And this debt has an interest fee attached.
Except that the interest is never created, until more deficits are enacted.
The current national debt (33+ Trillion dollars) is impossible to repay.
Yes, it is insane. No, you cannot object. See clause 4, 14th amendment, USCON.
The End.
Dollar bills (Federal Reserve Notes) are not dollars. They are IOUs denominated in dollars, but have a minus value until redeemed.
Pursuant to Title 12 USC Sec. 411, dollar bills are "obligations" (debt) of the US Gubmint. To authorize issuing more notes, Congress has to have a deficit.
And this debt has an interest fee attached.
Except that the interest is never created, until more deficits are enacted.
The current national debt (33+ Trillion dollars) is impossible to repay.
Yes, it is insane. No, you cannot object. See clause 4, 14th amendment, USCON.
The End.
Dollar bills are just a part of cash in the economy. You need enough dollars in circulation to keep the economy moving. As you spend cash it gets some momentum.
May have been a century ago when Confederate dollars flooded the market & became worthless. The printing press issues too many dollars for the people to accept.
IIRC the banks need to buy paper dollars to put them in distribution. When you go to the bank you can request yours. But you need an account at the bank or a check to cash to get anything. Same deal at a ATM machine.
I’m looking for simplified explanations how the fed increases the money supply in the US? Like do they just print more money or do they issue more bonds?
Also what do they mean by the fed increasing those reserves?
The Treasury issues Bonds.
The Fed can first create money out of thin air, and then use that money to buy the same amount in Bonds from say member banks. (QE) They need no printing press, but simply raise the bank's deposits by that amount at the Fed electronically. i.e. increasing their reserves.
The Fed can first create money out of thin air, and then use that money to buy the same amount in Bonds from say member banks. (QE) They need no printing press, but simply raise the bank's deposits by that amount at the Fed electronically. i.e. increasing their reserves.
What are the pros and cons of just printing more money vs issues bond to increase the money supply?
What are the pros and cons of just printing more money vs issues bond to increase the money supply?
Of course the bulk of our new money needs no printer.
Probably more apt to inflate if money is simply created first hand. Of course that is always dependent on where that new money goes. Does it go to increase bank deposits as in QE, or it it distributed by helicopter to millions of people within our borders?
The Fed can also reduce the reserve requirements of banks. This allows the banks to lend more money into existence and increase the overall money supply. Debt=money.
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