Why Does the Fed Print Money?

Many economic debate enthusiasts have their favorite arguments when it comes to the question of why does the fed print so much money? Some folks say it is to keep track of our debts. Others think it is to do its normal function of inflation or intervene in other economic areas. Still others think it does nothing at all.

In terms of the physical, actual, printing, no, actually the FED does not actually print paper currency. Paper money is always from the US Mint, and currency is created by minting coins. The coinage is then held as reserve currency by the mint until it is required for use. When the paper becomes worthless, then the government sell them back to the public in the form of cash. Money supply technically never changes hands.

However, in theory, money is created when a person or business creates it, whether from taxes or through a central banking system like the fed. So does the fed print money? To be more precise, the Federal Reserve does not “print” currency but the public does. It just makes it appear that they are doing so. In actuality, the fed is borrowing it from the private citizens of the United States through loans, both in the form of coins and checks.

The problem is, nobody really knows what the currency that is being printed really is. A lot of confusion and downright foolishness has occurred because of this fact. People don’t understand that the currency that they are dealing with is not real. This is especially true when dealing with cryptoledgers, who are selling the digital currency that is being printed by the government.

So does the fed print money as a way to keep the economy from failing? Obviously not. Printing money does not guarantee an economic recovery. The reality is, if the economy was ever to get back on its feet again, you would need to either drastically change the way that people think about money (which is almost impossible) or have all of it backed up by some sort of redeemable asset that we could call “real” currency. The problem is that neither of these options is possible.

That is why it is critical that people understand that the currency that is being printed is essentially a virtual product. It is not meant to be “backed” by anything that is truly valuable. If there was ever a time when the value of currency would somehow improve due to the efforts of the fed or the banks, then you would likely see hyperinflation in the United States and throughout the world. This might be a reality TV show we had seen, but it is not possible. So does the fed print currency?