Monday, January 24, 2022

    Latest Posts

    How Does The Fed Print Money? The Magical World Of Money Supply

    Ever wondered how the Federal Reserve can … print money?

    It may not be one of the most pressing questions in life, but it’s a process that many don’t understand.

    Let’s start by dispelling the most common misconceptions: the Fed is not it I have a printing press in the catacombs of the Federal Headquarters in Washington, DC

    Federal Reserve Chair Jerome Powell doesn’t wake up in the morning, walks to the Federal Reserve’s engraving machine and starts printing money … because the Federal Reserve doesn’t have a real printing press. ..

    That would be too mediocre.

    Instead, they have a magic printing press that makes money out of thin air.

    Yes, the printing press is very last century. The Fed is cool and hip and uses digital credit to increase the money supply.

    That is, how many of you will receive a physical check by mail from your employer? Most people today receive checks via direct deposits in their bank accounts.

    Your employer does not supply cash to your bank’s ATM, it simply deposits your payment into your account.

    The same principles apply to how the Fed “makes money.”

    Most of today’s money supplies are digitally debited and credited to major banks. Large banks lend money from Digital Ether to generate more magical money.

    This form of lending system is called the “fractional reserve banking system”.

    The holiday classic movie provides a good description of the Fractional-Reserve Banking system because it is a holiday.

    In a classic movie It ’s a wonderful life, George Bailey, played by Jimmy Stewart, faces a runaway at his bank on the first day of the Great Depression. Next, George Bailey explains how the banking system works for panicked customers. You can see the clip here.

    Poor George. He just wanted to travel the world, but his annoying savings and loans kept him back. And don’t let that evil old man, Mr. Potter, start me.

    But I deviate …

    In addition to the world of money creation at Hogwarts School of Witchcraft and Wizardry, there are other forms of currency that do not require a physical printing press.

    Harry Potter

    As just detailed, money does not have to be physically present to work in exchange.

    Businesses and consumers are also using checks, debit cards, credit cards, balance transfers and online transactions to increase the money supply.

    And that’s how the Fed “prints money.” But they may still do it the old-fashioned way.

    Banknotes are formally called the Federal Reserve, and the Fed pays for printing, transporting, and destroying damaged currencies.

    But that’s a boring way. Making money with a computer is more fun.

    Like the songs of the 80’s: “Girls [and central bankers] I just want to have fun. “

    How Does The Fed Print Money? The Magical World Of Money Supply Source link How Does The Fed Print Money? The Magical World Of Money Supply

    The post How Does The Fed Print Money? The Magical World Of Money Supply appeared first on California News Times.

    Source link

    Latest Posts

    Don't Miss

    Stay in touch

    To be updated with all the latest news, offers and special announcements.