Quote:
Originally Posted by Acting Like Godot  Usually, only a specific government body can print money. This body is called the "central bank". Despite the name, it is not a banker like, say, Citicorp or Deutsche Bank or JP Morgan. You can't go there and get a mortgage or apply for a credit card, for instance. |
I see. So, it's a bank ... that's not really a bank.
Well, you'll have to forgive me, ALG, but a "Central Bank" is still a bank in my book, and as long as it's called a "Central Bank," and as long as it maintains the authority to print money, then I don't think that it's entirely justified to claim that anyone who says that "banks print money" doesn't "understand any of this stuff."
I mean seriously, is it any wonder that anyone would be confused after hearing this kind of stuff? I honestly have a hard time believing that it's not intentional.
Quote:
|
The central bank "feeds" money into the system, through the banks. The central bank also "sucks" money out of the system, when there's too much money leading to inflation.
|
Right, well, as I understand economics (which is limited, I'll admit), inflation is the actual increase in the money supply, which leads to higher prices, not the higher prices themselves.
Also, as I understand it (since I have read some of the current Fed Head's speeches), price increases are a good thing, because it's not price decreases (heaven forfend anything should decrease in price
), and so it is maintained at a constant positive level through the increase of the money supply.
Quote:
Yes, money is printed and stored in vaults. A retail bank that wants plenty of currency notes could simply, say, sell government bonds worth $500,000,000 back to the central bank, and the central bank could pay by using the notes that it has printed.
The notes are then delivered by truck, with security guards etc etc, to the retail bank. Which can then take the money and load it into its ATMs around the city.
|
Okay. Thanks for the explanation.
So, from now on, I'll just have to remember that Central Bankers aren't really .. bankers. Got it.