Yeah, but doesn't the Federal Reserve just create this money out of thin air?

Question

http://news.yahoo.com/s/uc/20071121/cm_uc_crrscx/op_174445;_ylt=AtZNphwdyukeRrLol4DcWxnq188F

Like counterfeiting; only legal.

Answer 1

While it may be legal due to the hoodwinking of the US populace. It is far from ethical or American. We need to go back to the Gold/Silver standard under which our Money had value. The Federal Reserve Banking system has been set up to fleece Americans of their freedom and their wealth.

Answer 2

Sort of; it is a "trust currency" so is basically worthless except that people trust it can be used to buy things. Most countries have this form in modern times. In times past, paper money was directly transferable to some sort of valuable item that kept it's value over time (usually gold or silver) but economies became too large for the limited amounts of gold/silver and were thus causing economic problems and stagnation. In addition, there were other uses for these metals and governmental hoarding raised their prices for industrial use. Money follows supply and demand so the Dept of the Treasury has to be very careful on how much can be printed - more equals deflation; less equals inflation so they cannot just print it to pay bills.

Answer 3

"On the other hand, in economies when the monetary demand is highly unelastic respect to interest rates, rates close to zero, or a depressed money market (symptoms which imply a liquidity trap), QE can be implemented in order to further boost monetary supply, and assuming that the economy is well below potential (inside the production posiblities frontier), the inflationary effect would not be present at all, or in a much smaller proportion."

Answer 4

Yes they do but u have to understand how the money system works. the dollar is only worth anything as long as we have gold in the federal reserve to back it up. they make money to replace old money. if we were to just make more money with no more gold added then the dollar would loose value and the prices of stuff would be jacked up. thats why the dollar is no longer the worlds strongest currency. it is now the Euro. one euro is worth one dollar and 50 cents.

Answer 5

When they monetize the debt. Another way happens as great deal of paper money is added everyday to replace destroyed bills.

Answer 6

That's where it's at. The Federal Reserve and their component banks.

Answer 7

They issue Treasure notes, and when those come do and they don't have the cash on hand to pay for them, they issue more Treasuries. It's basically like paying off a credit card bill with another credit card. Eventually it's gonna catch up to us!

Answer 8

Not counterfeiting if it's genuine US bank notes. If they create too much the value of the dollar drops.

Answer 9

Yep.