How do banks and FED create money?

[pnilesh]

I am interested in knowing how the FED monetary policy works…I got to know that the FED creates money out of thin air…

how do the banks and FED create money from nothing? Any finance gurus here? I have heard of an “M” multiplier.. don’t know what it is and how it is relevant.

Any insights?

[cr]

You know those guys you see in New York city streets handing out flyers to passersby?

“Fed can have the ‘Bureau of Engraving and Printing’ create the paper bills as needed to match demand from banks for paper money.”

http://en.wikipedia.org/wiki/Federal_Reserve_System

[cr]

You know those guys you see in New York city streets handing out flyers to passersby?

“Fed can have the ‘Bureau of Engraving and Printing’ create the paper bills as needed to match demand from banks for paper money.”

http://en.wikipedia.org/wiki/Federal_Reserve_System

[cr]

You know those guys you see in New York city streets handing out flyers to passersby?

“Fed can have the ‘Bureau of Engraving and Printing’ create the paper bills as needed to match demand from banks for paper money.”

http://en.wikipedia.org/wiki/Federal_Reserve_System

[cr]

You know those guys you see in New York city streets handing out flyers to passersby?

“Fed can have the ‘Bureau of Engraving and Printing’ create the paper bills as needed to match demand from banks for paper money.”

http://en.wikipedia.org/wiki/Federal_Reserve_System

[cr]

You know those guys you see in New York city streets handing out flyers to passersby?

“Fed can have the ‘Bureau of Engraving and Printing’ create the paper bills as needed to match demand from banks for paper money.”

http://en.wikipedia.org/wiki/Federal_Reserve_System

[Author]

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