Other than the Multiplier effect which results from successive Bank Loans, and perhaps direct loans from the Federal Reserve to Banks, the only way currency can be created is if the Fed "buys" debt and prints money to cover it. The Treasury can issue debt and collect taxes but cannot print money on behalf of the state. This is my understanding of the US situation. Is this correct?
If so, are there other major industrial economies capitalist or otherwise with other rules on currency creation.? I ask this so I can better understand Central Bank Politics.
--mike
-- Michael Cohen mike at cns.bu.edu Work: 677 Beacon, Street, Rm313 Boston, Mass 02115 Home: 25 Stearns Rd, #3 Brookline, Mass 02146 Tel-Work: 617-353-9484 Tel-Home:617-734-8828 Tel-FAX:617-353-7755