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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Zoltan! who wrote (26181)	7/28/2000 9:23:16 AM
From: Neocon	Read Replies (1) \| Respond to of 769667

Thanks, Zolt, the comments were so utterly irrelevant that I didn't read them with care. Glad you caught it........

To: Zoltan! who wrote (26181)	7/29/2000 3:19:35 AM
From: nihil	Respond to of 769667

The cash shows up in the member banks reserve account. This may (or may not) create excess reserves. At any rate, this is cash on deposit in the fed bank which is not counted as money. Once the member bank increases its loans, it creates money, and reduces it reserve deposits. But it is not purchase of bonds by the fed that increases the money supply. It is the loans permitted (but not forced) by the member bank's increased reserves. Similarly, when the fed sells bonds it debits the payment for the bill against the appropriate member bank reserve account. The member bank finds its reserves reduced, and must make appropriate payments if it does not have excess reserves. Thus it neither the buying or selling by the fed that affects the money supply, but the induced adjustments by the member banks in increasing or reducing outstanding loans that increases or reduces the money supply. Guns don't kill people. People do. Understand?