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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (38798)6/1/2011 11:07:23 AM
From: rich evans1 Recommendation  Read Replies (1) of 71475
 
Printing money is called seignorage. It is buying directly from the Treasury. FED is buying from its primary dealers/private parties. It is done electronically and adds to the monetary base of the banks/dealers. The banks/dealers are not using the money to create credit- deposits so it is not getting into the money supply to any great extent. It is like putting the money in a mattress or tin can in your back yard. There are not just customers needing money who qualify for a loan. The potential is there of course but the Fed thinks it can reverse the process and stop any large increase in the money supply. The money multiplier is less then one. I think the main reason the FED is doing this is to control the spread and keep long term rates low. Frankly it would appear that this is no longer needed and therefore I would expect no more QE. JMHO..

Rich
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