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Comment by gammateam | Hacker News Reader

At their discretion they can buy an asset and the person they bought from now has money that didnt previously exist

This is what is being referred to as printing, but yes its just an unlimited asset issuance function in the currency class of a program

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Yes, but every bank can create money through lending, you don't need a to be a government agency to do that. The Fed just has less limits because it can just add arbitrary amounts of currency to its balance sheets.

Banks in theory have consequences for lending more than is reasonably available to them. The Fed really can create money out of thin air. That's a big difference.

As long as they satisfy their capital requirements, banks can lend as they please. They tend not to make really bad loans because directors are legally beholden to shareholders to ensure management is appropriately managing risk. The Fed doesn't tend to print trillions of dollars for no particular reason because it is legally beholden to its dual mandate. It's not that different. Yes the Fed can create "reserve currency" and banks can only create "commercial currency" but the distinction is a technical one and doesn't have a whole lot of macroeconomic impact.

The Fed has mandate that has nothing to do with the motivation of the banks. That's a huge difference - they create money for entirely different reasons. And yes, the Fed has an enormous macroeconomic impact obviously.

I don't think you actually responded to anything that I said, so I'm not sure how to reply. Did you just sort all of the words in my comment and pick some at random to respond to?

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