The Federal Reserve's Money Printing Failure
The Federal Reserve is the Central Bank of United States of America. It is responsible for printing the U.S. dollars & much more. The reason for Federal Reserve's existence is to maintain price stability and maximum employment.
The Federal Reserve (and other Central Banks) have been 'printing' money in recent years under various code-names, including Quantitive Easing (QE 1, 2, & 3), LTRO, SMP, TWIST, TARP and TALF, in order to bring unemployment down & speed up the economy. This article explains the failure behind the current money printing scheme and how banks, not people, get the money.
The Federal Reserve - Central Bank of United States of America
The Federal Reserve has a bottomless pit of money at its disposal. It is arguably the most powerful institution in the world- it controls the money of the Reserve Currency of the World - The US Dollar. It could destroy the world economy by simply changing the main interest rate (Federal Funds Rate), just like in '07/'08.
How money printing happens: The newly printed money is just a number on the computer; printing real money is expensive. The Federal Reserve must have a system to spread the newly printed money. It spreads the money by 'taking over' existing loans; in essence buying the loans (from banks, hedge funds or other financial institutions). This system reimburses the banks the money banks loaned out before it's repaid by client, by so injecting new money into the economy.
The loans are considered "assets" because they earn interest. There are various loans (assets) the Federal Reserve buys through its programs, including
Government loans (treasury bills, securities, bonds, etc), MBS (Mortgage Backed Securities- home loans), student loans, credit cards and auto loans and many more.
Little known fact: All money is debt. All money is loaned into existence. Banks can ALSO create money by making a "Reserve Requirement" deposit with the Federal Reserve. If a bank deposits $1 million with Federal Reserve, with a 10% Reserve Requirement it can loan out $10 million by simply typing it into the computer into an account. This is called Fractional Reserve Banking. Federal Reserve also works as a lender of last resort when the banks that loaned out 10x more than they have deposited, get a 'run on the bank' and can't come up with the money-- when more people are pulling it out than they have available. Federal Reserve protects the system that allows lending out what one does not actually have. Federal Reserve is also a private bank, privately owned and not responsible to the Government, or anyone, except possibly its 300 private share holders.
This might sound confusing, but money-creation is not taught in schools, therefore many completely lack the concept of how the system works. The economy text-books of today are Keynesian theory based-- "print more cash please", written by big corporations, such as McGraw Hill-- which are owned by the banks. Banks benefit from this system, and from you not understanding it. There are many videos and sites covering the concept of money creation.
Quantitive Easing 3 (QE3) - Fancy name for cash printing operation
$40 Billion / month in 2012
Federal Reserve to print $40 billion a month for remainder of 2012.
In September 2012, the Federal Reserve started its 3rd QE economic stimulus program.
Under this program Federal Reserve will for the rest of 2012 buy $40 Billion a month, each month, in MBS (home-backed loans) from the market, by so infusing new money into the economy.
$40 billion a month would amount to 9,600,000 jobs paying $50,000 / year. Unfortunately, more money does not equal more jobs. The newly printed money is not getting loaned out to consumers (as intended by the stimulus package) but stays with the banks and the banks invest the newly printed money in stocks for fast profits, by so pushing the stock market higher. The money does not go to SBA Bonds that are aimed at pumping cash into small business sectors.
Quantitive Easing 3 (QE3) continues into 2013
$85 Billion / month in 2013
Above is the projected Federal Reserve printing volume of dollars for 2013.
Federal Reserve intends to print $1020 Billions ($1.02 Trillion) in 2013.
In 2013 Federal Reserve will increase printing from $40 to $85 Billion per month by purchasing $40 Billion a month in MBS (home-backed loans) AND additional $45 billion in 10-30 year US Government treasurys (loans) from financial institutions. "The Fed will therefore monetize roughly half of the US budget deficit in 2013."- ZH
This is equivalent to 20.4 million jobs per year paying $50,000 / year.
http://demonocracy.info/infographics...2012-2013.html