[quote=patientrenter][quote=jficquette]
Net new money isn’t created unless its borrowed. If no debt is in involved then its simply cash to cash.
The Fed doesn’t print money. It sets conditions to influence how much of it is borrowed. Its the borrowing that expands the money supply.
Low rates won’t help anything if people are not willing to borrow it.
John
[/quote]
Yes since debt was increased money was created although not literally printed. It just shows up
John,
So what happens in this case?
1. Govt offers non-recourse 30-year 3% fixed rate home loans to anyone with a pulse, no money down.
2. Govt prints any money necessary to make the loans.
Even I would borrow to buy an overpriced house with that arrangement.[/quote]
You have a good illustration. In the case where people are actually taking the loans then money is being created. If people don’t want to borrow then no money will be created.
As far as actually printed though no. It will just be a bookkeeping entry in the entities books.
