Cumulative Increase in Money Supply as Ratio of Original Bond Purchase Inflation' Note First Users H

1
Cumulative Increase in Money Supply as Ratio of
Original Bond Purchase Inflation. Note First
Users Have Less Inflation.
Increase in Money Supply For Each Cycle as Ratio
of Original Bond Purchase.
2
Borrowers Have
Govt Writes Checks
Govt Has
Banks Lend Excess
Banks Lend Excess
Banks Lend Excess
Fed Buys Bonds
Borrowers Write Checks
Borrowers Write Checks
Borrowers Write Checks
Deposited Checks Create Excess Reserves 90
of Deposits
Government Sells Bonds
3
Increase in Money Supply For Each Cycle as Ratio
of Original Bond Purchase.
1.0
0.9
0.81
0.729
4
Salt in the Wound

• The Federal Reserve Bank creates the money to
  purchase the government bonds that we have to pay
  back with interest out of thin air. It literally
  did not exist until the instant they wrote the
  check to buy the bonds.
• The banks earn interest on the loans that they
  create based on their excess reserves. This
  new money also comes from the clear blue sky, and
  the borrowers get to pay it back with interest.
• The banks make a killing. The government creates
  all the money it wants to spend on whatever
  Congress can dream up, and the taxpayers get
  stuck with the inflation and paying off the bonds
  with interest.
• Then the taxpayers also get asked to take on more
  debt to bailout the banks!