Introduction In an earlier post (The Fed Does Not Create Money), I explained why the Federal Reserve banks do not create money. In this post, I will return to the definition of money and explain who creates money and the process by which claims used as money get produced. Definition of Money Money consists of … Continue reading Money Creation
Month: September 2023
The Federal Reserve Does Not Create Money
Synopsis Over the years, many goods have been used as “money.” Because a good has been used as money in one situation does not make it money in all situations. The market determines by its use what good qualifies as “money.” The market in the United States generally uses something we call “dollars” as money. … Continue reading The Federal Reserve Does Not Create Money
The Burden of Government Debt
Introduction Congress has returned to its frequent discussions about raising the debt ceiling. They believe, and rightly so, that most voters think the government runs like a business or individual. They make a big show of running around trying to figure out, “Where can we get the money to pay for all the spending?” But … Continue reading The Burden of Government Debt
Fed Funds Explained No. 6
“The Fed Buys U.S. Securities” A truth subject to misinterpretation. Introduction “The Federal Reserve purchases U.S. Treasury Securities to expand the money supply.” This statement contains some misinformation, and some truth and can be misleading. I will deal with these three points in order: Misinformation I have explained in an earlier post [“Who Actually Makes … Continue reading Fed Funds Explained No. 6