tag:blogger.com,1999:blog-2277215496195926573.post3581148450821559616..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Who creates the money that funds QE?Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2277215496195926573.post-68108857201542894172015-01-19T03:23:59.927-08:002015-01-19T03:23:59.927-08:00Agreed. In the above article I was just trying to ...Agreed. In the above article I was just trying to work out how much truth there is in Frances Coppola's claim that it's COMMERCIAL bank money that purchases bonds under QE. Far as I can see (to repeat) her claim is only true where commercial banks purchase government bonds PRIOR to selling them to the central bank, at which point (as you rightly say) the central bank issues reserves in exchange for the bonds.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-64644322743202140452015-01-19T00:58:13.830-08:002015-01-19T00:58:13.830-08:00As far as I know both the Treasury and the central...As far as I know both the Treasury and the central bank only accept reserve balances in exchange for treasuries.<br />Commercial bank created money is not accepted for this purpose. Banks either already have enough reserves to buy the treasuries or they must borrow them.Giacomohttps://www.blogger.com/profile/17354055357772897620noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-40278697930711551072015-01-12T02:10:42.855-08:002015-01-12T02:10:42.855-08:00If you're suggesting that only central banks s...If you're suggesting that only central banks should create money (i.e. that commercial banks should be banned from creating money), then I agree. That's full reserve banking and it's certainly simpler (and more stable) then the existing system.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-59975882937582247572015-01-10T05:41:20.253-08:002015-01-10T05:41:20.253-08:00Could money creation be less complicated than this...Could money creation be less complicated than this?<br /><br />I am looking at a green American Dollar ($1). I is a convenient size, shape, and weight. It has the signature of the Treasurer and Secretary of Treasury of the United States. It is a fairly new bill with the signature Timothy Geithner. <br /><br />Across the top of the face of the bill are the words "Federal Reserve Note". Apparently it is a NOTE.<br /><br />I am aware that the Treasury of the United States also issues BONDS.<br /><br />With this background, I can imagine that the Federal Reserve issues NOTES and the Treasury of the United States issues BONDS. Representatives of each organization can meet and exchange products, so that each representative can walk away with the others work.<br /><br />Then the Federal Reserve can happily hold bonds and Treasury can pay the debts of the United States.<br /><br />And of course this can all be done electronically!<br /><br />This process is unbelievably simple. Maybe too easy to believe.<br /><br />Thanks for the post. Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.com