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I am asking about the whether or not thr money created by bank loan and federal fiscal spending is ultimately created through the same process at the Federal Re
by SubiculumCode 7y ago
I am asking about the whether or not thr money created by bank loan and federal fiscal spending is ultimately created through the same process at the Federal Reserve.
- RobertoG 7y agoI think your confusion comes from thinking there is only one type of money. For simplification, there are two kid of moneys, the 'government money' and the 'lending money' (my terminology). Government money would be: cash and reserves. Reserves come from two sources (both are the government) the Central Bank and the treasure. So, when the treasure spend in the economy is creating government money. Also, when the central bank 'give' reserves to the private banks is creating money. When the govenrment tax is destroying money and when the Central Bank retire reserves of the system is destroying money. The 'lending money' is created by the private banks when lending, but it disappears when the money is payed back. This is a different kind of money, a less 'real' money if you want. You can find more information in many places. For instance: https://monetary.org/wp-content/uploads/2016/03/money-creation-in-the-modern-economy.pdf https://monetary.org/wp-content/uploads/2016/03/money-creati...
- SubiculumCode 7y agoThank you!