Re: Printing Money

[Bruce McFarling <brmcf@xxxxxxxxxxxxxx>]

	If you are a bank, and you have the reserves in
the Federal Reserve account, you withdraw the reserves.
You get a note from the fed that says you actually had
those reserves, and you can pass that note around, and
another bank can send the note back to the Federal
Reserve and increase their reserve account by that
amount. Which is why they call them Federal Reserve Notes.
	If the Federal Reserve needs more to meet the
withdrawal requests than they have notes on hand,
they have the Treasury print up more notes. So the
question is NOT where the paper money comes from,
but where the Federal Reserves come from.
	Or so Paul tells his students!

Virtually,

Bruce McFarling, Knoxville
brmcf@xxxxxxxxxxxxxx


On Thu, 23 Feb 1995, Jonathan Dune wrote:

> Does anyone know who decides, and why, to increase the quantity of
> printed money?  As the GNP expands, doesn't the supply of dollars also
> need to expand?  Where is all this money coming from, and where does it
> begin circulation?  (I am not talking about replacing worn currency)
>
> Jonathan Dune
>