On Wednesday, 3 August 2016 at 07:35:28 UTC, deadalnix wrote:
And how is this legal tender emitted ? With debt.
Do you mean how money is created?
The Fed and other major central banks use open market operations
like repos or outright asset purchases to control the money
supply. For outright asset purchases, a central bank buys bonds
from commercial banks. The banks then have more cash on their
balance sheets that they can lend. At least this step results in
less debt held by the public. The rest of the process is that the
banks then lend out the money and because of fractional reserves
more and more is created as the money gets lent.
I agree that debt is used in the money creation process. However,
this doesn't make money debt. However, sometimes debt can be very
money-like, e.g. U.S. T-bills.
