Tag Archives: Federal Reserve

Dear Mr. Econ… Tackling the Federal Reserve

Illustration by Karrie Lyons-Munkittrick

I am glad to see a column dealing with economics started in the Iguana.

Sometimes people accuse the Federal Reserve of printing money, but I believe it is the Treasury that actually prints money, while the Federal Reserve influences interest rates and money supply by setting reserve requirements for banks.

I would be interested in hearing an explanation about how the U.S. government creates money as a general topic. But my specific question is where did the Federal Reserve get the money to go into the market and buy mortgage-backed securities that it probably is still holding? I never knew that the Federal Reserve had its own money to use.

–  Goldie Schwartz

Dear GS:

What a great question! Especially in this election year, there have been so many misrepresentations about the role of the Federal Reserve System of the U.S. (the Fed). Your question provides a great opportunity for Mr. Econ to present the facts to all Gainesville Iguana readers.

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