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Title: No, the Fed Does NOT ‘Print Money’: Just Explain It
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URL Source: http://finance.yahoo.com/blogs/dail ... ey-just-explain-150433185.html
Published: Jan 24, 2012
Author: ;.
Post Date: 2012-01-24 14:29:07 by PSUSA2
Keywords: None
Views: 121
Comments: 5
The Fed starts a two-day meeting Tuesday. And while Ben Bernanke isn't expected to change rates, a lot is on the line. You probably have a sense the Fed is super important and powerful, but here's something you probably don't know: The Fed doesn't print money. Yes, that's right. Despite all the chatter on the campaign trail (hello, Ron Paul) and on cable TV, the Fed is actually not in the business of printing money. In America, the actual, physical printing presses are owned and operated by the Treasury Department...not the Fed. A lot of people are confused about this. That's probably because the Fed does control the money supply. But "money supply' is not the same as actual physical dollars — and yet another reason why economics is known as "the dismal science". The money supply equals the amount of physical cash plus the amount of credit circulating throughout the economy, which is where the Fed comes in a very big way. Think of the Fed as a bank — but just for other banks. The Fed lends money to banks, which determines the rate which banks charge the rest of us for everything from car loans to mortgages to credit card rates and pretty much every other loan you can think of (and some fees only a banker can dream up.) By setting the rate banks can borrow from the Fed, non-ironically called "the discount rate", the Fed helps determine whether rates are high or low for the rest of us. And those rates help determine whether people want to borrow money or not. In addition to the discount rate, there's the fed funds rate, which is the rate you usually hear people talking about when it comes to the Fed. The fed funds rate is the rate banks charge to other banks for overnight loans, which is common practice in the world of high finance. Technically, the Fed sets a 'target' fed funds rate, and currently it's between 0% and 0.25%, where it's been since December 2008. Another way the Fed controls the money supply — again, which is different than the actual amount of dollars in circulation — is via its "open market operations", through which it buys and sells bonds in the open market. If you've read news stories about the Fed buying Treasuries to help boost the economy, that's an example of 'open market operations' in action and is an example of "quantitative easing" or QE, which is not to be confused with a ship. When it buys bonds, the money supply increases because the banks exchange their bonds for cash and then have more money -- aka liquidity -- to lend to businesses or individuals. The opposite occurs when the Fed sells bonds to the banks, who typically can't refuse any offer from the Fed. In addition, the Fed controls the money supply by raising or lowering "reserve requirements," which is the amount of money banks are required to keep "on reserve" at the Fed, sort of like a rainy-day fund for the banking system. Raise those requirements and banks have less money for other stuff -- like lending; the opposite is true when the Fed lowers reserve requirements...or keeps them low as has been its recent practice. For more detail on how this all works, see the Fed's comic book: The Story of the Federal Reserve System. So while the Fed doesn't technically (or actually) print physical dollars, it has an enormous impact in the amount of money and credit in our economy. The real scandal is the banks pretty much have to do what the Fed wants, which makes Ben Bernanke the equivalent of a "Godfather" figure in the world of high finance. And you thought Wall Street was powerful? Poster Comment: Well that settles it...
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#1. To: PSUSA2 (#0)
Any numbskull coulld have told us this. But, good article. ;)
"When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
If it is not printed by the Fed than: 1. Why does it have to have the name Federal Reserve Note on it and be color coded green for an issue of the Federal Reserve System as a whole. (This color code takes the form of the department of Treasury seal and the serial numbers on the various types of paper money formerly issued in America. Originally Fiat Money was of two kinds, one issued by the treasury itself called United States Notes that was color coded red and one that was issued through a de centralized system of Nationally Chartered private banks that was called National Currency and color coded brown. Precious metal backed receipt money was color coded blue for silver and orange yellow for gold. All current paper money has the BOTH the green color code of Federal Reserve issue and the seal of the Federal Reserve system as a WHOLE (It used to have the numbered or lettered seal of one of the regional federal reserve banks on it. Now this original practice of issuing FRN's is limited to the one dollar bill.) as well as the Treasury Department on it that should tell us perfectly who the issuer of it is.) 2. Why did the people behind the Fed murder President John F. Kennedy when he signed an exectuive order that would have canceled the green color coded fiat money (Federal Reserve Notes) in favor of the red color coded fiat money (United States Notes) and the blue color coded precious metal receipt money (Silver Certificates). Just that it has "Federal Reserve Note" on it is proof enough. I'm not sure about the color codes. I never heard that before. Read the comments at the link. Not too many were fooled by this article. That's good to see. People are catching on to this scam. -------------------------------------------------------- These color codes are only well known anongst numismatists that collect old paper money like I do and are basically as follows; Federal Reserve Note (Fiat Money Issued by the Federal Reserve System as a whole) Treasury Seal and Serial numbers -> Green United States Note (original American Fiat Money) Treasury Seal and Serial numbers -> Red National Currency (Fiat money issued by nationally chartered independent banks and the individual Federal Reserve Banks) Treasury Seal and Serial numbers -> Brown Silver Certificate (Legal Tender Receipt money for silver) Treasury Seal and Serial numbers -> Navy Blue Gold Certificate (Legal tender receipt money for gold) Treasury Seal and Serial numbers -> Orange Yellow
#2. To: PSUSA2 (#0)
The Creature from Jekyll Island : A Second Look at the Federal Reserve
#3. To: PSUSA2 (#0)
The FARO RESERVE BANK!!! 
#4. To: Coral Snake (#3)
1. Why does it have to have the name Federal Reserve Note on it and be color coded green for an issue of the Federal Reserve System as a whole.
Somebody ought to tell the truth about the Bible. The preachers dare not, because they would be driven from their pulpits. Professors in colleges dare not, because they would lose their salaries. Politicians dare not. They would be defeated. Editors dare not. They would lose subscribers. Merchants dare not, because they might lose customers. Men of fashion dare not, fearing that they would lose caste. Even clerks dare not, because they might be discharged. And so I thought I would do it myself... Robert Ingersoll
#5. To: PSUSA2 (#4)
The FARO RESERVE BANK!!!
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