Not only are most of /biz/s opinions on the federal reserve completely wrong (aka printing money meme) but the truth is that they don't even actively regulate the amount of currency in circulation at all. They quite literally aren't even able to undertake a monetary expansion. The government, instead, are the ones who have the ability to undertake a monetary expansion. That, along with commercial banks who during the most extreme cases of increased reserves can, at best, be somewhat more willing to lend out money, the federal reserve doesn't actually even as much as influence the actual monetary base. They are able to increase or decrease rates, correct, but even still, the rates don't actually mean that banks are more or less willing to make loans all of the time, and that lower rates equals the exact same as more loans. The feds instead actively are affecting the bond yields rather than anything related to the monetary base. And as bond yields are directly tied to government spending, the end result can be that the government spends more, and that does increase the monetary base. But the feds themselves aren't flipping a switch up and down to expand or contract the monetary base.
>>62420147Ok.
This is what he looks like every time. Lmfao! Dont kill my dog. Please sir dont. Such a fake tough guy.
>>62420147Higher rates = higher bond yields, which equates to expansion of the monetary base. So hiking rates does accelerate the growth of the money supply as a second order effect. This increase is not felt until that money actually enters the economy, when rates drop and money exits bonds in search of higher yield elsewhere. It's a one-two punch and it lags extensively. Note that the money supply is always growing unless rates are negative
>>62420147Don't waste your time. The retards on here watched a few Peter Schiff videos and now they think they're experts.>The feds instead actively are affecting the bond yields rather than anything related to the monetary base.They barely effect bond yields. They can change the overnight rate only and that mainly effects money market funds, that's it. The longer duration yields are controlled by the market. That's why the Federal Reserve can hike or lower rates and the 10yr yield will still do whatever it wants and go either direction.
>>62420180No, it literally doesn't. The Fed lowered rates in 2024 and the 10yr went up.
>>62420162Are you a bot?
>>62420201Sure, but historically hiking rates correlates to an increase in bond yields. It's not like there's no relationship at all
>>62420147where are my fellow neo-CHADilitsts?
>>62420147>They quite literally aren't even able to undertake a monetary expansion.What do you call their open market operations where they buy securities for their own balance sheet using "bank reserves" ?
>>62420147Lower interest rate -> loans are cheaper to take out -> more loans are taken outEvery time a loan is taken out the monetary base is expanded
>>62420147>the truth is that they don't even actively regulate the amount of currency in circulation at allBut they do, effectively.
Proposition III: IORB gives the Fed direct leverage over the effective money supply beyond just yields.Proof:The claim reduces Fed power to bond yield influence alone. But IORB — introduced in 2008 — means Fed can sterilize its own balance sheet expansions by paying banks to hold excess reserves, or activate latent money by reducing that rate. This is direct dial on the incentive structure of banking system, independent of fiscal policy. Fed's tools extend meaningfully beyond yield curve management. Proposition IV: The claim conflates broad money (M2) mechanics with base money (M0), producing a category error.Proof:The argument correctly notes that:Banks are not always more willing to lend when rates fallLower rates ≠ guaranteed credit expansionThe money multiplier is not mechanicalThese points are valid criticisms of the simple money multiplier model — but they pertain to M2, not M0. The claim then incorrectly generalizes this to conclude Fed has no control over the monetary base at all. This is a non sequitur.M0 is entirely within Fed's direct operational control. M2 is not. Conflating the two produces the false conclusion.The argument defeats a strawman and declares total victory prematurelyConcessionsThe following elements of the claim are substantially correct and worth preserving: Fed does not "print money" in the colloquial sense of funding government spending directly.Credit expansion via commercial banks is not automatic/guaranteed by rate cuts.Fiscal policy is primary driver of broad money entering the real economy.Bond yield management is a central mechanism of Fed ops.Q.E.D.The claim overcorrects against a genuine misconception and lands in an equal and opposite error: that Fed has no monetary base influence whatsoever. The Fed does directly control M0 through asset purchases and reserve policy. The truth is that Fed controls the base, while fiscal authorities and commercial banks primarily drive broad money. Both matter.
