The Federal Reserve is not LITERALLY printing money. (PART 1)

A lot of people I talk to imagine a movie scene with a printing press and millions of dollars flowing through it. That's not what the Federal Reserve does.

In fact, the Federal Reserve can't create or print money. That honor belongs to the U.S. Treasury.

So what's all this talk in the news about the FED printing money?

They use their budget (their “credit card”) to purchase PREVIOUSLY ISSUED U.S. Treasury securities from commercial banks like Bank of America, Goldman Sachs, or Wells Fargo and thus increases the amount of liquid money in the economy to be spent or invested.

This is one method called “Quantitative Easing.”

There's another called “Debt Monetization” but that's a topic for tomorrow :)

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