| Who owns newly printed $s?

Who owns newly printed $s?

paul g asked:


When the Fed decides to expand the money supply by printing more money, who owns this money when it appears from thin air?

Does the money increase the balance of the US treasury/mint to be then lended to the Fed who then lends it back?

Does it increase the balance of the Fed who then buys treasury bonds with it “for free”?
The gold standard was scrapped in 1933.
Currency is no longer backed by any gold or assets.
It still maintains it’s worth because of consumer confidence: Unless there’s some kind of revolution, you will still be able to use the hypothetically worthless paper to buy stuff from anyone else who thinks they can do the same once they have acquired the paper.
When I say “printing” I don’t rigorously mean hard touchable money.

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Comments

2 Responses to “Who owns newly printed $s?”

  1. Russell M on April 11th, 2009 8:12 am

    The money is worth nothing if not backed by something. Each printed bill represents its value in gold.

    The Treasury destroys circulated bills at nearly the same rate as new bills are introduced to circulation.

    The money is still owned by the same parties who owned it prior.

    If all debts came due at a given moment, there would be only 1/8 enough paper currency to pay with. Most money (gold) is represented on balance sheets.

  2. SDD on April 14th, 2009 11:27 am

    “Printing money” is a euphemism, although it would be true if the only money one could use was currency. The Fed conducts monetary policy by buying and selling U.S. Treasury securities. When it buys, the money supply expands; when it sells, the money supply contracts. The vast bulk of the money that is created in the process consists of bank balances. Only a tiny percentage involves the actual printing of currency, which is done under contract for the Fed by the Treasury’s Bureau of Engraving and Printing.