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Bernanke tells Congress the Federal Reserve is printing money, just “not literally”

Recently, Forbes Magazine published this article by Augistino Fontevechhia,  “Bernanke admits to Congress: We are printing money, just ‘not literally’.”   How can the Federal Reserve System print money, just not literally?  What is going on here?

-MC

4 Responses to “Bernanke tells Congress the Federal Reserve is printing money, just “not literally””

  1. SA says:

    Printing money, but not literally printing money. Sometimes it would seem like it would be easier just to print money to help everyone out in the world. If we just printed more money than it wouldn’t mean anything. It really does make you think where the governments gets the money back up their assets.

    • mcoats says:

      SA, just printing it or buying government securities and letting banks expand checking money (deposits), is highly inflationary.

  2. AH says:

    Bernanke tells Congress at a meeting when asked if they were printing new monies, “not literally.” This was questioned and finanical instituions took this as be prepared for interest will be rising soon due to low inflation. He didnt directly answer the question.

    • mcoats says:

      AH,
      The fed does not have to literally print money if it expands open market buying, then bank reserves go up, increasing loans and lowering interest rates.

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