Do you understand how the Fed increases and decreases the money supply?

[justoffal]

Finished The Creature from Jekyll Island by Griffin, about the history of the Federal Reserve. I did not know the mechanisms the Fed uses to increase and decrease the money supply. I think a lot of people know a primary way to increase the money supply is when the Fed buys Treasury bonds (US government debt). A lot follows on from that. Curious how many people here say they know how it works.

This is just a pulse check. My sense is that the whole thing is mysterious to the vast majority of Americans - by design.

They use more than one method and it doesn't always include more paper. When you buy a house for instance the non down payment part which is mortgaged is simply created out of thin air with no new paper to back it up.

 

[Burgermeister]

By lending or selling securities

The Fed increases the money supply by lending.

 

[Moonglow]

The Fed increases the money supply by lending.

The one I mentioned is one of several ways they reduce the money supply, you saying no doesn't present any argument from knowledge.

 

[Burgermeister]

They use more than one method and it doesn't always include more paper. When you buy a house for instance the non down payment part which is mortgaged is simply created out of thin air with no new paper to back it up.

Paper money is 3% of the money supply. It's all electronic balances.

 

[Burgermeister]

The one I mentioned is one of several ways they reduce the money supply, you saying no doesn't present any argument from knowledge.

LOL. Wrong. The Fed creates money from the loans they make. That is how they create money. This is a fact, not an opinion.

 

[Burgermeister]

Ok cutting to the chase - When the government wants to spend money that they don't have, and they don't want to raise taxes to get it, they sell Treasury Bonds to the Fed - they borrow from the Fed. The Fed loves this, because they can now create money. The Fed creates money to give to the government (from nothing), which then spends it on government contracts, like aid to Ukraine or weapons to support a war. That becomes real money in circulation then as those contractors take that money and pay people and pay suppliers and put some in the bank. This causes inflation. This is how our national debt keeps growing ridiculously and inflation is inevitable.

What's even better for these bankers, is that these government bonds, bought with fake money that they created out of thin air, become assets on the balance sheet that they can leverage at a 10:1 ratio according to fractional banking rules to lend more fake money out and get interest. This is why the big bankers love war.

Now, the question was, what is the mechanism to reduce the money supply?

 

[sparky]

Now, the question was, what is the mechanism to reduce the money supply?

possibly selling bonds

but i'm at a loss as to what happens when the amount of debt gets to the point that there are not enough buyers......

~S~

 

[justoffal]

LOL. Wrong. The Fed creates money from the loans they make. That is how they create money. This is a fact, not an opinion.

This is why the dollar is referred as a debt note then?

 

[Toddsterpatriot]

The Fed increases the money supply by lending.

Not when it loans securities.

 

[Toddsterpatriot]

Ok cutting to the chase - When the government wants to spend money that they don't have, and they don't want to raise taxes to get it, they sell Treasury Bonds to the Fed - they borrow from the Fed. The Fed loves this, because they can now create money. The Fed creates money to give to the government (from nothing), which then spends it on government contracts, like aid to Ukraine or weapons to support a war. That becomes real money in circulation then as those contractors take that money and pay people and pay suppliers and put some in the bank. This causes inflation. This is how our national debt keeps growing ridiculously and inflation is inevitable.

What's even better for these bankers, is that these government bonds, bought with fake money that they created out of thin air, become assets on the balance sheet that they can leverage at a 10:1 ratio according to fractional banking rules to lend more fake money out and get interest. This is why the big bankers love war.

Now, the question was, what is the mechanism to reduce the money supply?

When the government wants to spend money that they don't have, and they don't want to raise taxes to get it, they sell Treasury Bonds to the Fed

The Treasury doesn't sell bonds directly to the Fed. They sell bonds to the public.

What's even better for these bankers, is that these government bonds, bought with fake money that they created out of thin air, become assets on the balance sheet that they can leverage at a 10:1 ratio according to fractional banking rules to lend more fake money out and get interest

The banks leverage the bonds or the Fed does?
How do they "leverage" them?
Explain the process.

Now, the question was, what is the mechanism to reduce the money supply?

If the Fed sells a bond, the money supply is reduced.

 

[RoshawnMarkwees]

There is X amount of stuff. The money that represents the stuff comes in various forms. The more forms and the ways to represent those forms only cuts the pie of stuff into smaller pieces making each portion of each form worth less. The more the fed grows, the poorer the rest of the country becomes.

 

[RoshawnMarkwees]

Steinbeck’s novel The Grapes of Wrath needs a sister version that has the Joad’s cousins move east into DC during the depression and end up living high on a hog on gov jobs paid for by the people hit hard by the depression.
While the original Joad’s suffer in California, their cousins send them postcards of their home in Greenbelt, MD from DC.
Call it The Grapes of Graft.

 

[Donald H]

LMAO, Since the results are 100% for one response, I'd think you could check your own poll and answer your own question.

Stop trying to make everybody out to be your enemy my friend.

 

[Concerned American]

Stop trying to make everybody out to be your enemy my friend.

Your free advice is worth what you charge for it duck, STFU.