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No, that's not true. The Federal Reserve does print money, in the form of being able to buy unlimited amounts of securities (Quantitative Easing) as well as bei

No, that's not true. The Federal Reserve does print money, in the form of being able to buy unlimited amounts of securities (Quantitative Easing) as well as being able to arbitrarily increase the amount of money in bank reserves. This is what the Fed has been doing during Covid and many would say this is the direct cause of the high inflation we are seeing now. It's very possible to inflate the currency at a pace that will not result in the complete destruction of the currency.

mullingitover 5y ago
> The Federal Reserve does print money, in the form of being able to buy unlimited amounts of securities (Quantitative Easing) as well as being able to arbitrarily increase the amount of money in bank reserves I mean, you're illustrating my point here: QE is when the Federal Reserve buys bonds, which means it's not printing the money out of thin air. It's making money that is backed by debt. Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to repay it. So both of these avenues for increasing the money supply introduce corresponding debt. Using this 'printed money' to pay down the national debt would be like using one credit card to pay the balance of another.
- netcan 5y ago
  >> Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to repay it. This is true. However, the second half of this isn't always intuitive. Bonds come with a commitment to redeem and pay an interest rate... but both commitments are in USD. Both USD and US bonds are accounts at the federal reserve. An institution holding bonds has an account, where they can buy a bond with a dollar or redeem a bond for a dollar. Their bond account will decrease by a dollar, and their dollar deposit account will increase by a dollar. No one's net position changes. Imagine if the rules were reversed: the treasury mints coins, deposits them in the Fed and receives bonds which it can spend.

mullingitover 5y ago

> The Federal Reserve does print money, in the form of being able to buy unlimited amounts of securities (Quantitative Easing) as well as being able to arbitrarily increase the amount of money in bank reserves I mean, you're illustrating my point here: QE is when the Federal Reserve buys bonds, which means it's not printing the money out of thin air. It's making money that is backed by debt. Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to repay it. So both of these avenues for increasing the money supply introduce corresponding debt. Using this 'printed money' to pay down the national debt would be like using one credit card to pay the balance of another.

netcan 5y ago
>> Same goes for reserves, that money isn't just dropped out of a helicopter with no strings attached, all that money introduced is backed by a commitment to repay it. This is true. However, the second half of this isn't always intuitive. Bonds come with a commitment to redeem and pay an interest rate... but both commitments are in USD. Both USD and US bonds are accounts at the federal reserve. An institution holding bonds has an account, where they can buy a bond with a dollar or redeem a bond for a dollar. Their bond account will decrease by a dollar, and their dollar deposit account will increase by a dollar. No one's net position changes. Imagine if the rules were reversed: the treasury mints coins, deposits them in the Fed and receives bonds which it can spend.