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Started By
Message
re: Fed balance sheet - a question
Posted on 8/17/10 at 5:59 pm to LSURussian
Posted on 8/17/10 at 5:59 pm to LSURussian
quote:
No, it isn't. The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill.
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
quote:
The Fed does not "issue" dollars.
It expands the money supply. It "creates" money.
The Treasury Department "issues" dollars by printing them. I don't think you understand that your your terminology is improper.
The treasury department doesn't issue any dollars, they print currency. It doesn't turn into actual money till the fed puts it into circulation. Try reading a dollar bill, it says "Federal Reserve Note". I think you've got your terminology wrong.
BTW, you might want to inform U.S. Code that its using the wrong terminology:
quote:
Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application.
LINK
This post was edited on 8/17/10 at 6:05 pm
4
Posted on 8/17/10 at 6:06 pm to RaysGoodLiquor
Here's some more improper terminology being used by the law which creates the fed:
LINK
And more:
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
quote:
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized.
LINK
And more:
quote:
In order to furnish suitable notes for circulation as Federal reserve notes, the Secretary of the Treasury shall cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000 as may be required to supply the Federal Reserve banks. Such notes shall be in form and tenor as directed by the Secretary of the Treasury under the provisions of this chapter and shall bear the distinctive numbers of the several Federal reserve banks through which they are issued.
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
This post was edited on 8/17/10 at 6:09 pm
Posted on 8/17/10 at 6:29 pm to RaysGoodLiquor
The word "issue" as you used it in earlier posts in this thread is totally different from the way the word is used in the link you provided.
Used your way, if the Fed buys a t-bill during its open market operations, it "issues" more Federal Reserve Notes. And that just does not happen.
The Treasury Department prints the currency. Treasury uses the Fed to distribute the currency through its branches and member banks. Until that distribution (issue) occurs, those currency notes are just paper. Only after those pieces of paper are put into circulation by the Fed do they become legal tender.
But Federal Reserve Notes in circulation are a very small part of the money supply. Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
Good luck to you in your quest to expand your financial knowledge.
Used your way, if the Fed buys a t-bill during its open market operations, it "issues" more Federal Reserve Notes. And that just does not happen.
The Treasury Department prints the currency. Treasury uses the Fed to distribute the currency through its branches and member banks. Until that distribution (issue) occurs, those currency notes are just paper. Only after those pieces of paper are put into circulation by the Fed do they become legal tender.
But Federal Reserve Notes in circulation are a very small part of the money supply. Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
Good luck to you in your quest to expand your financial knowledge.
Posted on 8/17/10 at 6:55 pm to RaysGoodLiquor
quote:
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
Who's balance sheet? Be specific
Posted on 8/17/10 at 8:01 pm to RaysGoodLiquor
Ray, no disrespect intended but a bunch of us actually have professional experience in this field. Based on your questions you don't. There's nothing wrong with that, I don't understand a lot of other professions myself but I don't pretend that I do and am willing to sit back and learn in those cases rather than lecture those who actually do know something.
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
quote:
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
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