The federal government is the sole issuer of currency. When the federal government spends, it credits recipients accounts with the press of a keystroke. The money is created from nowhere.
When the federal government collects taxes (social security, etc) it debits the accounts of taxpayers effectively deleting that money from existence.
If the government issued social security payments that exceeded the amount it collected, it would be creating money, which is one of its functions.
This is not at all how the federal reserve and treasury department work.
The fed does create money, but not directly. They control the reserve rate, which determines how much banks can lend over backed deposits, which in turn affects the amount of currency (not just physical but also digital) in circulation.
They can also issue or absord treasury notes and bonds to impact money supply, though this is fairly small compared to the first method.
Lastly, the treasury can print physical, paper or coinage money. This called “fiat currency” by the way. This, however, accounts for an even smaller portion of the moneg supply than bonds.
In short, the government cannot, does not, and will not simply “create money from nowhere.”
Federal Reserve Bank Chairman Ben Bernanke says that money is spent by the federal government simply by changing numbers in bank accounts.
"For further support we can just listen to Federal Reserve Bank Chairman Ben Bernanke. When asked “Is that tax money that the Fed is spending?” he replied, “ It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.” Mosler says, “the Chairman of the Federal Reserve Bank is telling us in plain English that they give out money (spend and lend) simply by changing numbers in bank accounts. There is no such thing as having to ‘get’ taxes (or borrow) to make a spreadsheet entry that we call ‘government spending’.”
It is that simple. How does the government spend? “Keystrokes,” says Wray. The money does not come from anywhere, it is created by the currency-issuer. Thus, taxing and spending are functionally two completely separate operations. The government issues the money with a few keystrokes at the Fed first, and then it taxes, removing some from circulation."
When the government approves civil projects such as infrastructure projects, the payments are considered issuing of currency according to modern monetary theory.
From Wikipedia regarding governments with Fiat currency: “When a government spends money, its treasury credits its operating account at its central bank and deposits this money into private bank accounts. This money increases the total deposits in the commercial bank sector.”
The federal government is the sole issuer of currency. When the federal government spends, it credits recipients accounts with the press of a keystroke. The money is created from nowhere. When the federal government collects taxes (social security, etc) it debits the accounts of taxpayers effectively deleting that money from existence. If the government issued social security payments that exceeded the amount it collected, it would be creating money, which is one of its functions.
This is not at all how the federal reserve and treasury department work.
The fed does create money, but not directly. They control the reserve rate, which determines how much banks can lend over backed deposits, which in turn affects the amount of currency (not just physical but also digital) in circulation.
They can also issue or absord treasury notes and bonds to impact money supply, though this is fairly small compared to the first method.
Lastly, the treasury can print physical, paper or coinage money. This called “fiat currency” by the way. This, however, accounts for an even smaller portion of the moneg supply than bonds.
In short, the government cannot, does not, and will not simply “create money from nowhere.”
Please avoid posting false information.
Federal Reserve Bank Chairman Ben Bernanke says that money is spent by the federal government simply by changing numbers in bank accounts.
"For further support we can just listen to Federal Reserve Bank Chairman Ben Bernanke. When asked “Is that tax money that the Fed is spending?” he replied, “ It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.” Mosler says, “the Chairman of the Federal Reserve Bank is telling us in plain English that they give out money (spend and lend) simply by changing numbers in bank accounts. There is no such thing as having to ‘get’ taxes (or borrow) to make a spreadsheet entry that we call ‘government spending’.”
It is that simple. How does the government spend? “Keystrokes,” says Wray. The money does not come from anywhere, it is created by the currency-issuer. Thus, taxing and spending are functionally two completely separate operations. The government issues the money with a few keystrokes at the Fed first, and then it taxes, removing some from circulation."
https://medium.com/@nicholasadiaz7/on-the-role-of-taxes-mmt-707fb4b3b80b
When the government approves civil projects such as infrastructure projects, the payments are considered issuing of currency according to modern monetary theory.
From Wikipedia regarding governments with Fiat currency: “When a government spends money, its treasury credits its operating account at its central bank and deposits this money into private bank accounts. This money increases the total deposits in the commercial bank sector.”
https://en.m.wikipedia.org/wiki/Modern_monetary_theory