How does the Federal Reserve create the money supply?

[OohPooPahDoo]

How does the Federal Reserve create the money supply?

(poll pending)

 

[Raoul_Duke]

With the stroke of a pen, or more accurately these days, the click of a mouse. It doesn't actually print anything. The amount of printed banknotes in circulation are only a couple of percent of the actual money supply.

 

[Raoul_Duke]

And then to get the money into the financial system it buys bonds with the cash it just created.

 

[The Rabbi]

They print the money and then give it to Obama so he can keep it in his stash and give it away when he wants.
[ame=http://www.youtube.com/watch?v=fOZ-Etb0k0Q]Obama Money - Where Did it Come From? - YouTube[/ame]

 

[sparky]

methinks print might be an erronous term, it's probably something closer to defecate

~S~

 

[editec]

It allows existing owners (private banks) to loan at interest.

A FED RES member bank is capitalized at say $1 billion.

Based on that those FED REVESERE OWNING BANKS can LEND (Some ratio-times ($1 Billion)) at interest.

The FED MEMBER BANKS, invent the money (based on the borrower's promise to pay) , not the FED itself.

This insures that there is always more outstanding DEBT than money out there to pay it, incidently.

Which means that still more money must be borrowed in order to repay the existing loans.

It all works rather well (for the banks, at least) until something unexpected happens and the borrowers cannot pay that money back.

And when that happens?

Well. what did the FED do when the BANSTERS started melting down?

The stood behind TRILLIONS OF DOLLARS with of bad loans to SAVE THE BANSTERS.

Nice work if you can get it, huh?