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Except that Congress lacks the power to do such a thing. The Fed has that power, but no incentive. In fact, the amount of printed currency in circulation has be

Except that Congress lacks the power to do such a thing. The Fed has that power, but no incentive. In fact, the amount of printed currency in circulation has been holding steady for the last year, so money is not being "printed". I wish the printing money conspiracy theory would go away. Edit: Changed 'money in circulation' to 'printed currency in circulation'. I think it should be obvious from the rest of the post as well as the context that I'm talking about printing money, but apparently my use of the word "printed" wasn't enough to convince people, so I added another use of the word.

jswinghammer 17y ago
In a fractional reserve banking system money is created when a loan is made. Thus when Congress takes out a loan for a trillion dollars that money is injected into the economy and as it passes through banks who also make loans there is even more money created. This is considered a feature of fractional reserve lending by the mainstream. Austrian economists consider it a bug.
dfranke 17y ago
The amount of money that is in circulation has been holding steady for the last year This has never been true at any point in recent history: http://research.stlouisfed.org/fred2/series/M2?cid=29 http://research.stlouisfed.org/fred2/series/M2?cid=29 Granted, the uptrend is a lot shallower than it was a year ago. Except that Congress lacks the power to do such a thing. The Fed has that power[...] Also untrue. Congress created the federal reserve through an act of legislation, and congress can just as readily destroy it.
watchandwait 17y ago
The Fed "prints" because it is buying mortgage and Treasury assets with magic new currency. Yes, the new cash is being hoarded as bank reserves and it is not in circulation (yet), but you can be sure it is newly printed money.
- cynicalkane 17y ago
  I'm aware of the expansion of reserves. My objection is twofold: 1) Don't say "printing money". It's not printing money. The Fed does something called printing money, and this ain't it. Don't even say "printing money" in an obtuse metaphorical fashion, since everyone who isn't aware of the current state of the Fed's balance sheet, including many people on HN, will misunderstand. 2) I doubt most of the newly created Federal reserve liabilities will ever see circulation. Remember, the Fed is controlled by people who do not want inflation to happen. Many top economists--notably Volcker, chairman of the Economic Recovery Advisory Board--would rather see a prolonged recession than inflation (cf. http://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Federal_Reserve http://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Fe...). Printing money to erase debts would inspire an economic revolt by just about everyone that isn't Congress.

jswinghammer 17y ago

In a fractional reserve banking system money is created when a loan is made. Thus when Congress takes out a loan for a trillion dollars that money is injected into the economy and as it passes through banks who also make loans there is even more money created. This is considered a feature of fractional reserve lending by the mainstream. Austrian economists consider it a bug.

dfranke 17y ago

The amount of money that is in circulation has been holding steady for the last year This has never been true at any point in recent history: http://research.stlouisfed.org/fred2/series/M2?cid=29 http://research.stlouisfed.org/fred2/series/M2?cid=29 Granted, the uptrend is a lot shallower than it was a year ago. Except that Congress lacks the power to do such a thing. The Fed has that power[...] Also untrue. Congress created the federal reserve through an act of legislation, and congress can just as readily destroy it.

watchandwait 17y ago

The Fed "prints" because it is buying mortgage and Treasury assets with magic new currency. Yes, the new cash is being hoarded as bank reserves and it is not in circulation (yet), but you can be sure it is newly printed money.

cynicalkane 17y ago
I'm aware of the expansion of reserves. My objection is twofold: 1) Don't say "printing money". It's not printing money. The Fed does something called printing money, and this ain't it. Don't even say "printing money" in an obtuse metaphorical fashion, since everyone who isn't aware of the current state of the Fed's balance sheet, including many people on HN, will misunderstand. 2) I doubt most of the newly created Federal reserve liabilities will ever see circulation. Remember, the Fed is controlled by people who do not want inflation to happen. Many top economists--notably Volcker, chairman of the Economic Recovery Advisory Board--would rather see a prolonged recession than inflation (cf. http://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Federal_Reserve http://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Fe...). Printing money to erase debts would inspire an economic revolt by just about everyone that isn't Congress.