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|User Info||How does the money multiplier apply to QE printing?; entered at 2010-03-23 18:36:08|
Registered: 2010-03-23 Austin
First forgive the simplistic nature of my question, but for some reason this part escapes me.
I'm looking at the March 17, 2010 fed balance sheet http://www.federalreserve.gov/Releases/H..... I'm trying to understand your statement "the FED creates money electronically by increasing the credit on their balance sheet." Currently, under Assets there is a line item "Mortgage-backed securities" valued at $1,066,440,000,000. Under Liabilities there is a line item "Deposits-Depository Institutions" valued at $1,118,090,000,000. So...
Does that mean before the MBS made it to the asset portion of the federal reserve balance sheet, the fed 1) credited $1,066,440,000,000 in their "bank account", 2)purchased Treasuries on the open market and then 3) exchanged those treasuries for MBS from various banks resulting in the treasuries being deposited in those banks reserve accounts?