OK, out of all the economic "experts" at the DUmp, did any answer the question?
A majority of the answers were along the lines of "out of thin air," "the Fed prints the money," and "it's like credit but nothing behind it to back it up." Cute, but wrong.
I take it all the financial wizards at the DUmp have answered. Goodness knows they aren't going to pass up the opportunity to show themselves to be geniuses at how the Fed Reserve works. And even if one of them had given the right answer, we know from experience that another DUmmie would have come along and written the correct answer, too, as though they didn't see the other DUmmie haven already provided the correct answer, so as to receive recognition and praise. It's the way of the primitives.
Of the 35 responses, these two were the closest:
HamdenRice
16. Generally by selling treasury bills. The Treasury has become a Hedge Fund
According to the Fannie Freddie bailout, as the Fed buys mortgage backed securities they sell treasuries to raise that money.
OurVotesCount-Ohio
24. They've just started a new program selling bonds for the federal reserve.
http://money.cnn.com/2008/09/17/news/economy/treasury_f...
From HamdenRice, the "Hedge Fund" thing is from left field, not sure where he dreamed that one up from, or the idea that the Fed sells treasury bonds. From OurVotesCount-Ohio, not sure where the "new program" belief came from either since this is how the Fed has raised the money for a long time now. But despite their not fully understanding it, which is obvious, they never really gave the correct answer.
Attn lurking DUmmies, the answer is this: The Treasury Dept, not the Fed Reserve, is the entity that sells treasury bonds. The Fed Reserve then borrows the money from those treasury bonds and in turn loans the money out to the various institutions they are trying to shore up.
Currently the Fed Reserve has access to around $450B in Treasury Bonds of which they have used around $200B in 2008 alone.
I guess my favorite was the "the Fed prints the money" answer. If you were to have an appraiser provide the total value of all assets in the USA and assign a dollar value to the whole, the amount of fiat money (paper currency) that has been printed as a percentage of the whole value is something in the neighborhood of less that 2%.
Once again, the DUmmies show they don't really have a clue how it all works. Anyone surprised?
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