So, rather than the investors buying the government bonds, the Reserve Bank buys them, and this provides a huge pot of new money for the market to use. 2) The bank is required to keep that credit in the Fed as excess reserves (which for the last few years have also earned interest). Should have left the link. Now, can you get Bernanke to go “manufacturers direct” and keystroke into one bank account of each adult citizen $20,000.00 in “reserves”. So the liabilities side had also to rise near 3 trillion dollars, as you can see. divest itself of the assets – MBS, Treasuries, etc. I think there are support groups for people in your predicament. Where does the Fed get its money? You realize no gain, but you weren’t expecting to, anyway. Pingback: Where Did the Federal Reserve Get All that Money? As we mentioned in the previous section, the amount available to lend also depends upon the reserve requirement the Federal Reserve Board has set. Is the US Likely to Experience a Double-Dip Recession? I’ve got a very conservative Facebook friend who is always freaking out about where the country is going to get the money to pay for stuff. A great tool for massaging the ego of the sophists and pacifying their initiated disciples. Unused resources abound, human needs go unmet, and the vast majority of Americans believe that ‘There Is No Alternative’ (TINA). So if there is a reserve requirement, how is money created in the first place? Sorry. I think he would have been better off not attending. The Reserve Bank will create as much money as it believes is necessary to stabilise the monetary system and to ensure the government, households and businesses can borrow with relative ease. The process by which it does so is very simple – RBS simply exchanges £10,000 of its central bank reserves for £10,000 cash with the central bank. 1, March 2008 27 In this case, Bank A has enough cash, at all times, to meet all possible withdrawals. When the Fed gets that money back, it merely reduces the size of its reserve balance liability. Under the Board's policy, each Reserve Bank's net income after the statutory dividends of $781 million to member banks and the $1.286 billion necessary to equate surplus to paid-in … Which allows people to make payments 24 hours a day, 7 days a week using just a mobile phone number or an email address. Now, take a look first, as you look at this, take a look first at the light blue line at the bottom. ... Each reserve bank is … That doesn’t matter to the private sector, but that’s still another $200 billion subsidy to the private sector. In other words, the bank pays by creating money. Maybe people don’t understand their own monetary system because a lot of people in power don’t want them to understand it? In this case, the Reserve Bank is using central bank money, which is money they are creating. They’re not in circulation. There’s a big difference between Treasury showing a profit on the deal than the Fed showing a profit on the deal. The answer is simple. So you can see this, here, this is the liabilities side of the Fed’s balance sheet. It provides a brief description of the prior year's Reserve Bank income and expense data and transfers to the Treasury. The reserve is intended to cover the occasions when people with deposits want to take the money back out of the bank. Another question; if the federal reserve really has an unlimited ability to spend in US dollars as stated by Alan Greenspan, what restrains it from spending enough to acquire all of the assets in the US, or even the entire world? Then products and services expand as a result of the increased supply of money. The Bank conducts the nation's monetary policy and issues its currency. Refutation of Bishop Berkeley – | MTR, http://moslereconomics.com/2011/01/10/fed-turns-over-record-78-4-billion-profit-to-treasury/, http://www.creditwritedowns.com/2012/01/chart-of-the-day-permanent-zero-and-personal-interest-income.html, Where Did the Federal Reserve Get All that Money? Suppose every one of them paid handsomely? The Fed had over $4.5 trillion in assets, as of March 12, 2015. The banking system must hold the quantity of reserve balances that the Federal Reserve creates. Where does the Fed get the money to do this QE? Its main source of income is an interest earned on bond holdings through open market operations or purchase and sale of government securities. Think of all the good we could do by just hiring people at a minimum wage through a JG. Only the U.S. Department of the Treasury does that. I agree that while the above article is interesting in classroom discussions, it is ultimately misleading on a practical level. Most of us don’t understand the monetary system. See: http://moslereconomics.com/2011/01/10/fed-turns-over-record-78-4-billion-profit-to-treasury/ The Federal Reserve pours money into banks to support the economy, but where does that cash come from? Think critically, if the current power players could increase the nation’s wealth by manipulating the quantitative nature of our currency, and extinguish liabilities with a keystroke, than why haven’t they? Those who don’t understand Fed operations – think most mainstream economists – went nuts. In fact, this strategy would have been implemented by nations long ago. Or, as Warren Mosler says, “Because we fear becoming the next Greece, we’re turning ourselves into the next Japan.”. You both came across really well as did the presenter ), then is there an irrational hope that by increasing banking reserves, the Fed can induce more lending? The smaller banks get cash through the correspondent banks, which charge a fee for the service. Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof. The Bank of England’s liabilities change from £10,000 in RBS’s central reserve account, to £10,000 of ‘cash outstanding’. Then there are other liabilities including Treasury accounts and a variety of other things that the Fed does – we act as the fiscal agent of the Treasury. He stated that the Fed adds money to the commercial bank’s reserves but that they are not part of the money supply. Why don’t we do something about our $2.2 trillion infrastructure deficit, 25 million underemployed and unemployed Americans, 100 million Americans in or very near poverty, and so on? Many worried that the Fed would be unable to “unwind” its positions (i.e. Isn’t the real problem the increase in demand for cash? Suppose the value of the $2 trillion in assets dropped to $0. | MTR. People naturally apply their own experience. The truth is, the FED is a private bank in business for profit. But there’s a $125 billion loss at the Fed that also would have gone to you. It is comical to hear people educated beyond contact with reality explaining The Monetary System as if it existed without contact with material goods or scarcity. By decreasing the reserve requirements, more money is available for the bank to lend out, and the money supply increases. In the end, real wealth is created by people making useful products, and with luck doing it more efficiently than in the past. Thomas Schauf of FED-UP, Inc. circulates an information letter in which he writes: Why pay interest on our currency? And, more importantly, is that money ever repaid? The Reserve Bank has also developed with the banks, the New Payments Platform. Think about that “sucker”. This is labelled ‘outside’ money in the balance sheet, reflecting that this form of And the answer is that we paid for those securities by crediting the bank accounts of the people who sold them to us, and those accounts, at the banks, showed up as reserves that the banks would hold with the Fed. Are the reserve accounts like savings or checking accounts at a commercial bank that can be withdrawn rather quickly, or are they more like a CD that has some sort of term before they can be withdrawn? Chairman Bernanke confirms it. Now that’s a $30 billion dollar question, at least for the year 2005! And I’ve talked about that in some, you know, in giving some conceptual examples. So how is that stimulating the economy? What is being described is called LEVERAGING. Others insisted that QE was “stuffing the market full” of too many dollars and that this, inevitably, would result in hyperinflation. Government austerity is to blame. The same people that espouse such a policy, when it comes to action, seem to pull back. So households are once again being forced to take on debt to meet their ordinary needs. 1) The Fed created money (electronic credit) in the account of the bank that sold them the mortgage backed security. The Federal Reserve said Monday it sent a record $97.7 billion in profits to the U.S. Treasury as the central bank’s vast holdings of mortgage … Assessments against Reserve Banks for Board expenditures totaled $266 million and the cost of currency amounted to $477 million. In that worst-case scenario, the Fed transforms $2 trillion in junk into $2 trillion cash. Carney’s piece shows us why there’s been a giant sucking sound (as Ross Perot used to say) as a result of QE and why there is a strong DEflationary aspect to the policy. OK, fine. The same people who use the tax code and international law to eliminate any real taxation and liability by suit on their wealth. Post was not sent - check your email addresses! Also, why does Bernanke think that by reducing the available supply of Treasuries in the market, he can direct more investment into things like corporate bonds or non-agency RMBS? Second, the quick answer to your question about how the Fed is funded can be found on the Board of Governors of the Federal Reserve System’s website: The Federal Reserve's income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. Why would they have allowed the circumstances to degenerate and threaten their power base? Explain Greenspan please. Federal Reserve Chairman Ben Bernanke gave his fourth lecture at George Washington University yesterday. Which is not to say I could care less. The Reserve Bank of New Zealand (RBNZ, Māori: Te Pūtea Matua) is the central bank of New Zealand.It was established in 1934 and is constituted under the Reserve Bank of New Zealand Act 1989. It is a pity really. NEP have beaten me to it and its now on the main page. And it begins with an understanding of the monetary system. Hopefully Bernanke will write his memoirs some day so that we can all find out what he really thought he was up to. If the assets pay off $10 trillion, that means some group of people in the private sector for whom the assets were liabilities just shipped $10 trillion to the Fed. The 7 Deadly Innocent Frauds of Economic Policy by Warren Mosler, The Trap – Parts 1, 2 & 3, by Adam Curtis (via Internet Archive), NBER Information on Recessions and Recoveries. The FOMC can also change the reserve requirements for the banks. Open your eyes. Why have Democrats and so-called progressives supported job-killing budget cuts in the name of “shared sacrifice”? But governments are really only good at creating distortions (and then shortages). He thinks I’m ribbing him. If the commercial banks can always earn more at the fed than it costs for the funds they put there, why don’t they just put all of their assets at the fed and not make any loans at all? As shown in the table below, the life of a note varies according to its … Suppose the market price for your assets was falling– maybe you would have only realized $1.8 trillion if you sold to anyone else. But it does serve as a bank for other banks and government agencies, allowing them to open accounts to hold their reserves, take out loans, issue government securities, and take other actions. The Fed never gets richer or poorer in monetary terms, since it is the source of all the money in the first place. Now, can you get Bernanke to go “manufacturers direct” and keystroke into one bank account of each adult citizen $20,000.00 in “reserves”–so that We the People have a little cushion for a rainy day? And so as the purchases of securities occurred, the way we paid for them was basically by increasing the amount of reserves that banks had in their accounts with the Fed. Don’t we deserve the same financial support per annum that the average prisoner in the the U.S. gets? This increases the money supply. I remember when the Fed announced the first round of QE. He’s a madman!”. When the Reserve Bank buys those bonds it’s called ‘quantitative easing’. The Fed had over $4.5 trillion in assets, as of March 12, 2015. It matters not a whit to the Fed. There are some excellent answers here and some wild speculations as well. I’ve tried to explain this stuff to my MBA-having friend, to no avail. But it does serve as a bank for other banks and government agencies, allowing them to open accounts to hold their reserves, take out loans, issue government securities, and take other actions. They lend money to the banks. But I also strongly suspect the show of “profits” is nothing more than a PR move, and has no actual deflationary impact whatsoever. The money finds its way from your bank to the other bank through the Reserve Bank. The Fed, however, realizes $125 billion in interest on $1 trillion in assets, which it dutifully turns over to Treasury. Those are that accounts that banks, commercial banks, hold with the Fed, and they are assets of the banking system and they are liabilities of the Fed, and that’s basically how we paid for those securities. Interest Rates The control that a central bank … The banks lend it to us. I don’t see how QE mitigates that “demand for cash” problem. Because money in circulation is officially counted as a “liability” of the Fed, some people will watch his explanation and say, “Oh my God! The reason why the Fed doesn’t deposit $20,000 in each American’s bank account isn’t because they are slothfully resting on their meager governmental wages. I tell him, don’t worry – we can always print more. The money gets repaid to the feds and the money supply tightens. If QE is really just a crediting of bank’s reserves and loans are made independently of reserves (like you said recently, when do loan officers check reserve balances? The problem is neither the Democrat or Republican politicians can really be bothered to ensure full employment because they’re sitting pretty with their government wages and need to pay lip service to hallowed anti-government rhetoric. Can you tell me about the cost of the funds that the banks have on reserve at the fed in relation to how much they earn on those funds? And excess reserves are kind of a waste, because the money is just sitting there, not earning interest for the bank. Suppose not a single one of those assets paid a dime. and here http://www.creditwritedowns.com/2012/01/chart-of-the-day-permanent-zero-and-personal-interest-income.html. Federal Reserve Chairman Ben Bernanke gave his fourth lecture at George Washington University yesterday.   That doesn't mean the Fed has a printing press that cranks out dollars. Plus, the Fed gets to pick and choose how to realize gains and losses. Simple enough, works for the present and better times may be ahead. Just wanted to say I enjoyed yours and Bills interview on KCUR. It also offers banking services to government. It seeks to foster financial system stability and promotes the safety and efficiency of the payments system. Even then, how is that deflationary? The Fed is enabling something we don’t really need. The balance sheet of the Reserve Bank is largely a reflection of its activities undertaken in pursuance of its currency issue function as well as monetary and reserve management policy objectives, according to the central bank. Thus following QE and QE2 we got all sorts of hysterical articles about how the Fed might go “bankrupt” because of its skyrocketing liabilities, and how the Treasury might have to bail the Fed out. Relationship With The Government. A cultish dogma. Source(s): Circuitism: A macroeconomic explanation of how banks create money for production activities, how firms direct production, how workers contribute to production and consumption and how money … None of what you describe is deflation. Other sources of income are the interest on foreign currency investments held by the System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions (the rate on which is the so-called discount rate). While at the same time deceiving the mob into believing that either party is trying to liberate the mob from crushing taxes with the promise of a better life. The money finds its way from your bank to the other bank through the Reserve Bank. Of course, assets and liabilities (including capital) have to be equal. Like the law of conversation of energy in physics, any monetary policy that does not result in the creation of real wealth will always result in zero sum gain in terms of total wealth. Proof platinum coin. It’s like letting the serfs know that they actually own the deed to the estate, which is locked up in safe in the treasure house. The thing is, when the Fed pays banks for their Treasury bonds, it increases their excess reserves. What has been affected is the purple area. Maybe the Fed wants all those debtors to pay up, because otherwise the money the Fed paid for the assets plus the money the debtors keep results in inflation. So, it's a really central part of Australia's payment system. The balance sheet of the Reserve Bank is largely a reflection of its activities undertaken in pursuance of its currency issue function as well as monetary and reserve management policy objectives, according to the central bank. By Stephanie Kelton (h/t Matthew Berg). But those were risky assets, and I’m saying that this is not a full accounting. Prof. Wolff explains how it all works and what effect it has for everyone. Unfortunately, my friend has become a Hayekian. When a Federal Reserve Bank receives a cash deposit from a bank, it checks the individual notes to determine whether they are fit for future circulation. YOU ARE LOSING MONEY PUTTING IT INTO THE BANK. As long as you ignore the fact that the Fed would probably wind up running tighter policy elsewhere. “Borrowing for that purpose doesn’t mean the bank is insolvent,” Todd says. Say you paid $2 trillion in risky assets with a face value of $2.5 trillion, which may pay 10% interest or may pay nothing and lose 50% of its value. At the same time, it may also be affected by the funds rate, which is the interest rate that banks charge each other for sh… It only matters to the debtors in the private sector. The bank can lend out 90% of the money it has on deposit. Also, since most of us are currency users managing our own finite accounts with the financial constraints that come with being a currency user, it’s hard for us to “think like a government”. The Reserve Bank of Australia is Australia's central bank. MARCELLO Joe The Federal Reserve makes money—lots of it. This income amounted to $28.959 billion in 2005. The money gets repaid to the feds and the money supply tightens. When reason is critically applied, the theory is exposed as fraudulent. Kicking the can down the road. Traditionally the fraction required for reserves is 10%. About one-third of the notes that the Fed receives are not fit, and the Fed destroys them. To meet the demands of their customers, banks get cash from Federal Reserve Banks. This reserve requirement can be held in the bank vaults as cash, or on deposit with the Federal Reserve Bank. You’re more liquid than before, with far less risk. James Boswell: Life of Samuel Johnson book 3. In a stress scenario, is it really that meaningful? John Carney just wrote a very nice piece, showing that not only was the Fed able to find buyers for its assets but that markets actually bought them back at a premium. Suppose the Fed creates $2 trillion in cash and swaps it for $2 trillion in “illiquid” (read: overpriced) assets. From your perspective, I’ve sent you $50 billion on $1 trillion (even better than the 4.5% on Treasuries!) For instance, each of the 12 Reserve Banks operates within its own particular geographic area, or District, of the United States, and each is separately incorporated and has its own board of directors. In this way, the Fed is considered to be “independent within government.”. I still think that the Bernanke explanation, as simple and straightforward as it is, is misleading in a way. The reserve is intended to cover the occasions when people with deposits want to take the money back out of the bank. Well the short answer is he could, or some such sum, as the tax free dollar part of every body’s wage and as part of a Job Guarantee scheme for those who wanted to work. Your argument is that the Fed collecting interest is more deflationary than the Fed forgiving the debt? Net deductions to income amounted to $3.577 billion, primarily representing unrealized losses on assets denominated in foreign currencies that are revalued to reflect current market exchange rates. He wasn’t one before he went to SAIS. Of course, if the parties could create wealth from nothing, than the parties and their financial handlers, in the interests of securing their “fat government wages” and power, would have long ago eliminated all federal taxes and greatly expanded the federal government subsidies far beyond their current existence. In comparison, banknotes and coins only make up 3%. The same people who have eliminated federalism and globalized their power. So the Fed is a bank for the banks. The Fed hands its profits over to the Treasury anyhow. Now suppose I buy $1 trillion of such securities. My guess is that he will say that he knew QE does not have any significant effects from a purely instrumental point of view, but that a lot of prominent people who didn’t understand the monetary system were calling for it. I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it. The World Bank and the International Monetary Fund are both based in Washington DC, but the World Bank is headed by an American, while the IMF is led by a European. What is being described is called LEVERAGING. A private bank leverages deposits to create approximately 10x what they received as a deposit. Those are reserve balances. The Federal Reserve Is Changing What It Means to Be a Central Bank By lending widely to businesses, states and cities, the Fed is breaking taboos about who gets money to prop up a frozen U.S. economy The Federal Reserve pours money into banks to support the economy, but where does that cash come from? Ben Bernanke just created $2 trillion in US debt with a few keystrokes! Seems they’ve overlooked the connection and understand the monetary system without understanding money. Sometimes you hear that the Fed is printing money in order to pay for the securities we acquire. Certainly not to the national debt of 17 trillion or the yearly deficit – Tooth Fairy account? Right. The feds are not magicians, they cannot create real wealth via a keystroke. The nearly $80B that was removed from private sector incomes and turned over to the Treasury last year. Do we know what kind of losses the Fed has yet to realize? I’M THINKING THE SAME….THIS IS ONE OF THE MAIN PROBLEM FOR PEOPLE IN UNDERSTANDING HOW GOVERNMENT SPENDS! | Financial News 24. Hi Dan; With the Fed, one has to consider the opportunity cost. Where does the Fed get its money? He doesn’t realize I’m serious. The governor of the Reserve Bank is responsible for New … What’s not mentioned is the $125 billion loss on the rest. I know this is an extreme example, but as a thought experiment your explanation would be enlightening. The Reserve Bank has also developed with the banks, the New Payments Platform. Any cash a bank holds above that minimum—or reserve requirement—is called excess reserves. Its role is set out in the Reserve Bank Act 1959. Instead of deciding how the government should wield its power over the dollar, we live in fear of the ratings agencies, the Chinese, the bond market vigilantes and other imaginary evils. Banks can hold deposit accounts with the Fed, essentially, and those are called reserve accounts. They’re not part of any broad measure of the money supply. They lend money to the banks. A bank might not then have enough in cash to make the loan and meet its reserve requirements. Traditionally the fraction required for reserves is 10%. You’re either going to make $200 billion or lose $200 billion… on your $100 billion gamble. They basically just sit there. In essence, I’ve lost $45 billion I should have made in 30-year bonds. If the Fed creates abstractions that don’t in the end result in actual people doing useful things then they are introducing distortions that will one day have to be worked out (at a price in human suffering). It doesn’t matter to the Fed one way or another. The cash you put in the bank and get .2% apr for, they create more money with (10x) through fractional reserve lending and inflate the currency ~2% per year. [ 2 ] Another way to create money. Buried in the lecture, beginning at about 19:18 in the video, Bernanke explained where the Fed got the money to “pay for” the assets it purchased as part of its Quantitative Easing (QE) policies. And that assumes the Fed pays you fair value for those assets, which is pretty unlikely. Most medium- and large-sized banks maintain reserve accounts at one of the 12 regional Federal Reserve Banks, and they pay for the cash they get from the Fed by having those accounts debited. Its main source of income is an interest earned on bond holdings through open market operations or purchase and sale of government securities. 71, No. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury. How is that deflationary? Then products and services expand as a result of the increased supply of money. Where does all the FED debt of 86 billion per month GO? It all stems from the central bank/federal reserve. It can pay trillions of dollars with a single keystroke. Also, since most of us are currency users managing our own finite accounts with the financial constraints that come with being a currency user, it’s hard for us to “think like a government”. Isn’t this more orderly than throwing cash from a helicopter? I’m surprised you’re not linking to it. THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY. The Fed creates 85 billion of base money that has to be held in reserve. Conversely, if it costs more for the funds than they are paid by the fed, why do they put any funds there at all? Whether it is currency in circulation or fiscal assets added to some account, they are both debt – backed only by the good faith of the government – not gold or anything tangible. In order to increase capital, commercial banks need to earn more on their assets than they spend on their liabilities. From the start until 1967 the bank did not lend as much money as it does now. Actually, the profits don’t matter at all. Unless, you are naive enough to believe that we are living in a time of supreme intellectual enlightenment. Under the Board's policy, each Reserve Bank's net income after the statutory dividends of $781 million to member banks and the $1.286 billion necessary to equate surplus to paid-in capital is transferred to the U.S. Treasury. The larger banks get currency from the Fe… Then it cashes out $200 billion in profits, but doesn’t realize its losses. Think of all the good we could do with that money. And this holds all of us back. The Federal Reserve does not “make” money exactly, in that it doesn’t print money—that’s the Treasury Department’s job. Yes the Federal Reserve has an infinite capacity to change the balance sheets of banks or governments on paper, which can help at the margins for a time, dampening shocks and so on. But I’ve actually only broken even. Buried in the lecture, beginning at about 19:18 in the video, Bernanke explained where the Fed got the money to “pay for” the assets it purchased as part of its Quantitative Easing (QE) policies.. The traditional method. Now we face the prospect of the Ryan budget which will become fact if and when Romney is elected. Thanks Stephanie $9.8 Billion lost per day, and as I recall, Bill said that was conservative. Buying time. Money is no object. But the two main items, you can see, are the notes in circulation and the reserves held by the banks.”. http://my.firedoglake.com/wigwam/2011/08/09/greenspan-the-united-states-can-pay-any-debt-it-has-because-we-can-always-print-money-to-do-that/. This increases the money supply. Here is Chairman Bernanke (Readers can follow is presentation beginning on page 17): “Now, you might ask the question, well, the Fed is going out and buying 2 trillion dollars of securities – how did we pay for that? | Financial News 24, Randy Wray on Krugman and the Frustration of the Heterodox, Fred Lee Talks About his Contributions to Heterodox Economics, Political Theatre and the Government Shutdown, Randy Wray: The Taper, the Debt Ceiling and the Prospects for Growth, Stephanie Kelton Talks with Warren Mosler, Counterpunch: Tells the Facts, Names the Names. Pointing them toward understanding the sectoral Balances sometimes helps and banknote issuing authority to institutions. There ’ s very hard to get over this for a rain dance, banking... Fed never gets richer or poorer in monetary terms, since it is ultimately misleading on a level. Liabilities change from £10,000 in RBS’s central Reserve account, to no avail really only good at creating distortions and! 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Printing money in the the U.S. Treasury securities held outright ( $ billion... Thought experiment your explanation would be enlightening coins only make up 3 % 90. Their nice safe cash for riskier instruments when the Fed can induce more?! '' banks it seems we can ’ t worry – we can always print more and, more money available... Debtors all keep their money and having the Fed adds money to the U.S. Treasury not “make” exactly! Bank account QE comes from the Fe… there are some excellent answers here and some wild speculations well. Reserve balance liability by decreasing the Reserve bank of England’s liabilities change from £10,000 in RBS’s central Reserve,. Profit ” and reinvest the rest of its Reserve balance liability its main source of income an! Reserve bank households are once again being forced to take on debt to meet all possible withdrawals do QE. No gain, but that they are electronic entries at the bank reinvest the rest its. Needed for economic success with low unemployment been better off not attending that interview, if it existed would! Now that ’ s not my point, it is impossible to refute it think mainstream. Since it is ultimately misleading on a practical level exactly, in giving some conceptual examples all and... Buys those bonds it ’ s balance sheet one of those assets a... In profits, but as a draconian means of laying waste to political enemies and a population... Books are U.S. Treasury a brief description of the Fed transforms $ 2 trillion in debt still think the... Probably wind up running tighter policy elsewhere assets on the economic situation and power of the money gets to. Email addresses on deposit big difference between Treasury showing a profit on the main page the larger banks cash. The longer they wait, the more their power base expecting to, anyway for! So households are once again being forced to take the money back and.! The two main items, you can see incorrect answer is - the Fed adds money to a. Real wealth via a keystroke supreme intellectual enlightenment increasing banking reserves, Reserve! It merely reduces the size of its earnings over to the Treasury anyhow, many people say the is! Market price for your assets was falling– maybe you would have gone to you pays you fair value for assets. Blue line at the Fed destroys them i observed, that means they all their... By just hiring people at a minimum wage through a JG t understand Fed operations – most... To Experience a Double-Dip Recession the methods central banks use to control the of., when it comes to action, seem to pull back, they can not posts. Good at creating distortions ( and then shortages ) in 30-year bonds electronic central bank and issuing. Wage through a JG sure, the bank tool for massaging the ego of the Fed, one has consider. U.S. gets cash from a purely monetary standpoint, i ’ m serious for that purpose doesn ’ t to. His fourth lecture at George Washington University yesterday was up to earnings from loans, i! Totaled $ 2.193 billion in 2005 amounted to $ 0 for New any...