In this episode of Money Creation Explained, we are going to
cover How Governments Create Money.
In most modern economies, money creation is controlled by
the central banks of that country. For this example we are
using the US Government. The Fed (also known as Federal
Reserve System) is the central bank of the US comprised of
12 different Federal Reserve Banks around the country, owned
by big private banks and operates relatively independent of
the government.
When the US government needs more money in the economy, it
borrows money by issuing bonds and then orders the central
bank to buy those bonds by printing money. This means that
the government has to pay interest on every dollar that it
prints. At the time of publication of this episode (2022)
the US National Debt is 31.36 Trillion. From 1922 to 2009
the US National Debt grew to 16.43 Trillion in 87 years. In
the 13 years since 2009 the national debt has almost
doubled. Printing money causes inflation, higher taxes and
many related issues.
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