Thursday, March 19, 2009

Fed to Buy $1 trillion in Securities

The New York Times writer keep labeling the FED's purchase of securities as "creating money out of thin air." Of course it is, but this is nothing different than when a commercial bank makes a loan and writes a credit besides the borrowers name. All money is debt and and created. There is no other kind. If our government gives commercial banks the power to create money, surely the government's own bank, the Federal Reserve, can do it also when private borrowers will not borrow enough to use all of the economy's resources.

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