Creating Money

Printing Money is a confusing term.  It is often used in news reports with a picture of dollar bills in the background or dollar bills rolling off a printing press.  The public is confused enough about the nature of money to reinforce their confusion by equating dollars with dollar bills.  Only about 3 percent of money in circulation is paper dollar bills.  Everything else is an electronic record expressed in quantities of money.

Create Money is a much better term.  However, the media has confused that term also.  It is often connected to the phrase "out of thin air".  The Federal Reserve Bank, a private bank, creates money out of thin air to loan through the fractional reserve banking system and loan to the US Government.

Out of thin air causes problems for people that want the gold standard to have some under laying value relationship to money.

Creating money is really creating information.  We are in an information society.  Some is worthless like spam some is very valuable like patented information or medical records.

Money (dollars)  used as a medium of exchange was created as a piece of valuable information.  It was born as an entry on a keyboard and with a press of the enter key it existed in a secure domain of computer system communication and data storage infrastructure.

Dollar bill paper currency rolling off the printing presses is a popular tourist attraction.  This is funny:  the website for that link is called moneyfactory.gov!  "You'll see millions of dollars being printed during a tour of the BEP"  How exciting!  No free samples!  

This is how the Wall Street Journal contributes to the confusion of creating money:

If the Fed is going to create boatloads of depreciating, non-yielding dollar bills,  who will absorb them?  

Within the same article the WSJ uses this grapic to illustrate their story:

Deceptive!   That picture is not what the Fed creates!  They only create numbers on a computer not actual bills.


Then the WSJ further confuses the issue by saying: " ... news was the Federal Reserve's announcement last Tuesday that it intends to debase its own paper money."  True if by "paper money they mean all that digital computer money that the Fed creates but paper money is popularly conceived of as paper dollar bills.


What the BEP prints as the creation of paper currency is peanuts.  Where the big money is created is the Federal Reserve.  It is created there in the trillions of dollars!  That is exciting!  Maybe the most exciting thing in the money world and nobody sees it.  It could be the biggest tourist attraction in NYC after Times Square.  Watch trillions of dollars being created!  There should be a web cam so anybody could watch it on the internet.  At the Federal Reserve Bank website there should be a total in big numbers on the first page stating how much money was created as a running daily total.  Maybe with instant replays of someone entering a number on a keyboard and pressing a button.  Who is that person?  People?  How many are authorized to do that?  They should be made famous.  Nobody in the world has ever made so much money!  Can they telecommute to work?

Federal Reserve Bank tour info is here.  The tour includes cash and gold.  Peanuts for the public.  The real (digital push button money)  is created on a computer behind the curtain. That is what I would like to see.

It seems like there might be some interest in exactly who gets to push the button to create trillions of dollars.  Does Bernanke do it on his coffee break?  I googled "who creates money at the Fed"  An obvious question.  Nobody has ever asked it as far as google is concerned.  No hits at all.  Maybe I need to get more creative in my search.  Is it a good paying job?  How would they advertise to hire for that position?  Could be an amusing job offer.  The fed could make money if they auctioned off or had a lottery on pushing the enter key that creates trillions of dollars.  What a thrill!  Maybe the next reward on Survivor?


What they really did when they pushed the enter key was to create a piece of information.  Highly protected information.  But where is its value in association to anything?  It has potential value that it can be used to create a debt when it is loaned to someone or somehow used in conjunction with supporting a loan process but that value of the newly created information, other than the fact that it exists is not realized until it is connected somehow to a loan.  When some amount of the created money is associated with a loan in exchange for something, that amount becomes a debit on the banks asset record associated to a credit on the bank record of the entity it was loaned to and whatever document the person receiving the loan used as a promise to pay in exchange for the loaned money.

There is a benefit to the Fed to confuse the money issue in the mind of the American public and they are doing a good job of that.  The worse the situation becomes, the more they have to confuse the public.  That is easy to do.  


Money is:  A piece of created information.  It is a highly protected piece of information existing primarily (97%) in a computer information system.