Bob, I'm just curious. And this may be a stupid question. But is the Fed actually printing physical paper dollars that will be forced into the economy, or is it just digital numbers on a balance sheet? And either way, does it make a differnce?
It all starts off as digital since the Fed buys Treasury securities in the open market through "Primary Dealers" (Goldman, Morgan Stanley etc.) The eventual originating seller then could convert it to cash, but I doubt this is done very often. If the multiplier effect kicks in and some small sized loans are made some of that could eventually end up as cash, or if the money is used for payroll where the employee cashes a check--but most of it stays digital.
Bob,
ReplyDeleteI'm just curious. And this may be a stupid question. But is the Fed actually printing physical paper dollars that will be forced into the economy, or is it just digital numbers on a balance sheet? And either way, does it make a differnce?
Thanks,
Peter F.
Hi Peter,
ReplyDeleteIt all starts off as digital since the Fed buys Treasury securities in the open market through "Primary Dealers" (Goldman, Morgan Stanley etc.) The eventual originating seller then could convert it to cash, but I doubt this is done very often. If the multiplier effect kicks in and some small sized loans are made some of that could eventually end up as cash, or if the money is used for payroll where the employee cashes a check--but most of it stays digital.