Quote:
Originally Posted by Matt 26z
Where does the Fed get the money from?  |
Bonds, cash and securites just like every other bank and then they multiply that figure by 10+times, lend that out and that bank multiplies that loan by 10+times, etc, etc. A bank including the Fed has what's called reserve and this is the total amount of cash and "securities" on hand. They can then lend out 10+times that amount. Part of what caused the crisis is A LOT of these banks were leveraged out into the hundreds of times reserves on hand. The actual printing of money itself is just a small fraction of the entire scheme. What causes a banks collapse is the "bank run" when everyone goes in to withdraw their cash at the same time descimating it's reserves.