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Every year, every government produces more money in its mints. How is this then fed into the economy?

2007-08-12 00:12:21 · 3 answers · asked by Simba 2 in Social Science Economics

3 answers

Newly minted currency is distributed only through depository institutions (banks) which pay for the new currency with old currency or other assets usually government bonds. This has the effect of paying off government debt with newly minted money. However this is not the primary means of "money creation". That is done by the Federal Reserve Bank interventions in the financial markets for overnight loans (fed funds).
http://www.federalreserve.gov/generalinfo/faq/faqcur.htm#21

2007-08-12 01:40:34 · answer #1 · answered by meg 7 · 0 0

Through Banks.

2007-08-15 21:43:01 · answer #2 · answered by Anonymous · 0 0

it is feed through banks and finacial institutions.

2007-08-12 14:49:24 · answer #3 · answered by Anonymous · 0 0

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