tag:blogger.com,1999:blog-922508784789848683.post5105709389125452096..comments2023-10-14T04:14:28.655-07:00Comments on Eric Schuler's Blog: Democratic Hypocrisy Blocks Efforts to Audit the FedEric Schulerhttp://www.blogger.com/profile/13731904241907200488noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-922508784789848683.post-60173684669844528892016-02-20T18:56:36.754-08:002016-02-20T18:56:36.754-08:00So there are two things here. There's what the...So there are two things here. There's what the Fed can do, and there's what banks do.<br /><br />The Fed can and does expand the money supply directly, generally by purchasing treasuries. On that subject and Fed monetary policy, you may find this podcast of interest with George Selgin which gets into some of the details and the difference between the Fed changing interest rates and directly affecting the money supply. http://www.econtalk.org/archives/2015/12/george_selgin_o.html<br /><br />I never said anything about a money multiplier. But you're right that bank loans do create new money in an economic sense. Though whether they actually end up expanding the money supply would likely depend on the precise definition being used.Eric Schulerhttps://www.blogger.com/profile/13731904241907200488noreply@blogger.comtag:blogger.com,1999:blog-922508784789848683.post-88221606981221128162016-02-19T13:41:39.574-08:002016-02-19T13:41:39.574-08:00No. Your macro is all wrong. The Fed cannot expand...No. Your macro is all wrong. The Fed cannot expand the 'money supply' what ever you mean by that. It can only effect the interest rates and the portfolio i.e. reserves or treasuries.<br /><br />The money multiplier is a myth. Banks don't lend reserves outside the payments system. Every new loan is new money.cringing2https://www.blogger.com/profile/07174637668885864648noreply@blogger.com