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Alex G
Lv 4
Alex G asked in Politics & GovernmentPolitics · 4 years ago

Don't central banks (including the US Federal Reserve) just create money out of thin air? If not, where does it come from?

4 Answers

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  • ?
    Lv 7
    4 years ago

    You know nothing about money. Money is created when loans are made and what you speak of is currency which is different than money.

  • 4 years ago

    Thin air? No, money is made from electrons and entries in computer files these days. Even thinner than air. The basic method is for the Fed to lower the "reserve" requirement for banks. This allows banks to loan out more money ... money that they don't really have. The bank just says, okay you now have $10,000 in your checking account. That $10,000 doesn't "come from" anywhere, the bank just makes a note in their records.

    The Fed is very very scared of inflation, so this money creation process is tightly controlled, and monitored every day. Right now, the banks have to have $10 of "real money" in their vaults for every $100 they loan out. Back in 1960, it was $17.50.

  • gerald
    Lv 7
    4 years ago

    yes they do its called quantitative easing billions of dollars are printed and bunged into the banks to lend out to you for a charge and you pay it back with interest good isn't it make a few try it need some gas make a few dollars

    it is a giant monopoly game where only you go to jail and you are the fools soon parted from your money you believe in this sh** dream freedom huh half of you are in jail

  • 4 years ago

    The value of American money is based on gold. They can and do print more currency than the value of that gold, but it's risky because it can cause inflation.

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