How does the Federal Reserve get away with printing magic paper notes(dollars)? Shouldn't we go back to commodity currency like gold, silver, and food?
/mlpol/ - My Little Politics
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>How does the Federal Reserve get away with printing magic paper notes(dollars)?
Open market operations. It buys government debt with money it creates out of thin air, then sells that debt to massive financial banks, who count it as money and are thus able to use it to inflate the money supply, since due to the policy of fractional reserve money, banks only have to actually have a small portion of the money they say they have, and can loan the rest out for interest. The Federal Reserve is also complicit in this aspect of the monetary system, since they set the reserve ratio, and thus decide maximum extent to which banks can (and without fail will) inflate the money supply.
>Shouldn't we go back to commodity currency like gold, silver, and food?
Yes, but we won't the government is much further along in its collapse than it is now.
Open market operations. It buys government debt with money it creates out of thin air, then sells that debt to massive financial banks, who count it as money and are thus able to use it to inflate the money supply, since due to the policy of fractional reserve money, banks only have to actually have a small portion of the money they say they have, and can loan the rest out for interest. The Federal Reserve is also complicit in this aspect of the monetary system, since they set the reserve ratio, and thus decide maximum extent to which banks can (and without fail will) inflate the money supply.
>Shouldn't we go back to commodity currency like gold, silver, and food?
Yes, but we won't the government is much further along in its collapse than it is now.
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>>261033
Ahem.
We already have a Federal Reserve thread with the answers and even more.
The Fed Thread: >>227245 →
Ahem.
We already have a Federal Reserve thread with the answers and even more.
The Fed Thread: >>227245 →
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