RE: Money 101: The Types of Money

[outwars]

I guess I need to improve my understanding of these things more. I was under the impression that the Fed creating more digital currency ["printing money"] results in more "buying power" being introduced to the markets. They can buy securities and assets with this "printed money". While the act itself of "printing money" doesn't cause inflation, this introduction of buying power, and assets being bought using this "printed money", can cause inflation. Since theoretically, those assets wouldn't have been bought at the time without the newly "printed money".

Comments

[taskmaster4450le]

How is in increasing buying power? What can be bought with what they print?

[outwars]

This is where I was reading before:
https://www.investopedia.com/articles/investing/081415/understanding-how-federal-reserve-creates-money.asp

The Fed does this in various ways, including changing the target fed funds rate with the goal of affecting other interest rates. Or it may buy Treasury securities on the open market to add funds to bank reserves. Banks create money by lending excess reserves to consumers and businesses. This, in turn, ultimately adds more to money in circulation as funds are deposited and loaned again.

Fed buys Treasury securities to add funds to bank reserves. With these new reserves, banks are able to lend more to consumers/businesses. These "new money" going out to the public is additional buying power is it not?