Do You Know How The Fed Pumps Up The Money Supply?
Recent news reports announce that Federal Reserve has “pumped” money into the economy, without making clear what this means. Do you know how the Federal Reserve “pumps” money into the economy? You might be wondering how this matters to you. The fact is that the more you understand how governments control money, the better you will be able to take control of your own economic situation, especially in a global economy. One of the primary functions of a government is to control the amount of money in the system. Every nation has a central bank. In the United States, the central bank is the Federal Reserve. The central banks pay attention to the condition of the current economic conditions, and then take actions to either heat up or cool down the economy. The news media use colorful language to say that the Fed is “pumping money” into the economy to calm fears of an economic panic. In other situations, the media refer to actions of the Fed intended to “drain money” from the system. Even th
