on page 43 of harry browne book how you can profit from the coming devaluation a paragraph claims
“In modern practice, then, the govt does not print paper money to casue inflation. It prints paper money in response to the inflation that takes place through the bank’s deposit-loan expansion.”
is this true?? is the only reason that new-additioanl paper dollars are printed and coins minted in response to paper cash reserve ratios that banks are requireed to keep via banking legislation???
if so, where are the banks required to keep this paper cash/coin?? dispersed throughout their branches and atms??? at the nearest federal reserve bank??? is a certain percentage of paper and coin to be kept at banks based onb each branches amount of loans???
additionally, if banks are responsible for credit expansion once they do this do they usually get some additional paper cash printed in response to that in some way???
The Federal Reserve’s purpose is to basically not let society feel the effects of a recession, at least from my knowledge of it. When there’s a recession, market activity drops, which leads to less inflation. In response to start up the economy again, the Federal Reserve prints money. However, they don’t understand that the market slows down in a free economy when there’s an imbalance. It course-corrects itself. But when they print money, it leads to over-inflation since the economy would have gone back to normal in the beginning. Then prices keep going up and they decide to do more in order to fix the problem that they themselves caused in the first place.
Instead of having faith in the market, the Federal Reserve has just caused a huge roller coaster of increases and decreases that only help speculators who understand the market. This can help investment firms that know what they’re doing, but not everyday American citizens. And I don’t mean to sound demeaning to American citizens. If the Federal Reserve weren’t in place, they wouldn’t have to know much about the economic system in the first place.
In order to move beyond the most rudimentary understanding of monetary economics, you’ll have to understand the difference between money and federal reserve notes. Take a paper dollar out of your pocket. On the top, you’ll see that it says “Federal Reserve Note.” Near the lower right hand corner, you’ll see the signature of the secretary of the Treasury at the time that the bill was printed. This, as the title indicates, is a federal reserve note. It is printed by the Treasury Department and can be exchanged directly for money, but it is not money. Banks are not required to have any of these but they keep them in their branches and ATMs for the convenience of their customers. I was talking to a bank branch manager a while ago at the end of a day when his branch had run out of these notes. It was an inconvenience because he had to wait for an armoured car to deliver more of these to his branch, but there was no concern that he had violated any fiduciary duty.
U.S. dollars can only be created by the Federal Reserve. They create money in order to buy treasury securities or, more recently, mortgage-backed securities. The money is created in the Fed’s computers and wired to the primary dealers from whom they buy these securities. Without getting into technicalities, the banks are required to keep reserves in the form of this type of money amounting to 8% of total assets. The money does not have to be in Federal Reserve notes and most of it is not.
"The money is created in the Fed’s computers and wired to the primary dealers from whom they buy these securities. "
is the exerpt from teh harry brown book above incorrect then???
is much of the rothbard writings about fraudulent reserve ratios concerning paper cash to bank credit false…and misleading??
if money (fiat) as you say is a digital entry in a federal reserve computer why arent the paper notes that say federal reserve note money as well?? do the digital entreis say 'this is money"? does they do anythng different than the federal reserve note???
is it money or credit that is created?? temporary digits to lend and be repaid and disappeared??