What is the process and how does it get in the hands of the rich first?

Sat. 12/06/16 17:14 EDT . post #167 [url= Newly Created Money ] Also, check out this video: Fiat Money My (basic) understanding is this: The government borrows money, by selling Treasury Bills (T-Bills), in an amount at least equal to its budgetary deficit plus expected interest. The Federal Res…

But, because the Fed gets this money back with interest doesn’t that cause deflation?

“But, because the Fed gets this money back with interest doesn’t that cause deflation?” It will only cause deflation if the fed simply puts the new money in reserve to cover their on demand accounts (an unlikely event). In other words, if they try to use it to increase their reserves. Otherwise thi…

What does the Fed do with the money it recieves from the loans and bonds they give out?

Inflation is the biggest robbery scheme in human history, and the masses are simply too uneducated to realize it. Imagine stealing 3%, 5%, 7% of the money in an entire economy. That’s what inflation accomplishes. And I believe it was Friedman who explained how the mechanism works. That when the go…

“What does the Fed do with the money it recieves from the loans and bonds they give out?” The same thing it does with other sources of income. Pay its workers and fees, print dollar bills, make more loans, etc.

Sun. 12/06/17 09:42 EDT . post #170 [url= Newly Created Money - #4 by EmbraceLiberty ] It would, if what the Fed did after getting the principal and interest back was keep the interest and destroy the principal. But is this what happens? I don’t think so. What happens is that the government borrows…

The FED buys government securities with money that it creates out of thin air. Thus, open market purchases necessarily constitute an expansion in the supply of money. The question now is, who gets the money that the FED magically creates?

You answered your own question. The Fed prints money then buys US treasury bonds and the like. So, by that mechanism, the US gov gets the created money. The sole limiting factor is the idea that the US needs to pay interest on those bonds and can’t thereby borrow forever. In theory. Kinda stupid.

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John_James June 16, 2012, 2:37pm 2

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Fractional & full reserve banking & the Federal Reserve links in The Ultimate Beginner meta-thread

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