How the Fed's "Money Printer" Really Works

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Strong rec italicbold · 2020-08 · on “Banks create money, but it's less impressive than it sounds”

The modern banking system does not use fractional reserve lending. Highly recommend this video to understand and this channel in general: [this video] Skip to 1:14.

Recommends throw0101a · 2020-08 · on “Ask HN: I have $450K cash, what should I do to maximize my return?”

> the willingness of the Federal reserve to print money (create debt). Without restraint nowadays. Ben Felix, a portfolio manager at PWL Capital in Canada, just released a video explaining why this is completely wrong: * [this video] > Quantitative easing is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity. But what exactly does that mean? In today’s episode, Benjamin and Cameron are going to address this topic, avoiding highly politicized aspects, like whether or not central banks should be involved in the economy in the first place, and focusing purely on the operational perspective of

Recommends throw0101a · 2020-12 · on “2020 had some significant silver linings”

Strictly speaking, in the modern era, it is not "a government" that decides to print money, but rather the central bank, which are considered independent on government and do (should) not follow the orders of politicians. The central bankers are hired for a fixed-term (though renewable) and are given a mandate: > The Federal Reserve works to promote a strong U.S. economy. Specifically, the Congress has assigned the Fed to conduct the nation’s monetary policy to support the goals of maximum employment, stable prices, and moderate long-term interest rates. When prices are stable, long-term interest rates remain at moderate levels, so the goals of price stability and moderate long-term interest

Recommends throw0101a · 2021-05 · on “Negative interest: Danske Bank changes threshold for personal customers”

> Savings in a bank account will be loaned by the bank to another business. This has not been how banks have worked for decades: * [LINK] Banks create loans typing something into a computer screen and money shows up in the businesss' account. No savings required. 99% of money created is not by the Fed "printing money", but rather by private bank loans. A twenty minute video summarizing the above paper: * [this video] Interview with the paper's author: * [LINK]

Cites throw0101a · 2020-08 · on “Ask HN: I have $450K cash, what should I do to maximize my return?”

> Is the landscape of 1991 the same as the landscape of 2020, with its 10% of the s&p in just a few companies Yes, it is the same: * [LINK] * [LINK] * [LINK] * [LINK] * [LINK] That's the definition of the S&P 500: the largest five hundred companies publicly traded companies. > with money printing, I do not think this actually does what you thinks it does: * [this video] * [LINK] > […] Talk shows about stocks and news algorithms pumping stocks to the masses? Please see the 1990s and "irrational exuberance". I live in Canada: ask anyone here above a certain age (40s) about Nortel and Bre-X. > Are fund managers (who have clients) compared to the likes of you and me ? Fund managers have more resource

Cites throw0101a · 2020-08 · on “Apple becomes first U.S. company to reach a $2T market cap”

> Yep! S&P 500 reaches pre-COVID level record high again recently all thanks to U.S. Fed's UNLIMITED Quantitative easing (QE) policy. I question the validity of this hypothesis, at least in so far that it has a predominant or even major effect: * [this video] The video cites an US Fed paper on the subject (see Section 3): * [LINK] It's mostly "policy shocks" / surprises that cause changes in bond rates, which may have knock-on effects to other asset classes. Indexes have gone up and up and hit all-time highs regularly over the decades on their own: there's no need to throw QE magic pixie dust as a cause. Further, in the past, a much smaller percentage of the population probably had equity ownersh

Cites simula67 · 2024-11 · on “Engineers do not get to make startup mistakes when they build ledgers”

> The bank is not printing money new money, no matter how many times this idea gets repeated by people who are, ironically, pumping crypto coins that were printed out of thin air. It is now widely accepted that bank lending produces new money[1][2] [1] [LINK] [2] [this video]